It's good to know that Orca is at least getting bug fixes.
Orca 4.0.5299.0 which comes with the Vista Platform SDK suffered a problem where deleting certain rows in a transform would cause it to crash.
The repeatable example (and it may not be confined to this) is a transform that deleted the only row in a table. You can reproduce it by starting Orca and opening "c:\program files\orca\orca.dat" (or equivalent). This is Orca's template msi. Perform a File->Save As to save the msi somewhere (not over orca.dat). Add a dummy row to the LockPermissions table (for example) and then File->Save.
Then select Transforms->New Transform, and delete the LockPermissions row. Bang, Orca beaches itself.
This came to my attention because Orca would crash when clicking the LockPermissions table when viewing a transform (built by another tool) that deleted the only row in the table. So it's not just that Orca can't generate these transforms, it can't even view them.
But, the good news is that the Orca version released in the Windows Server 2008 SDK seems to have fixed this problem. So if you must use Orca, definitely get the latest.
Of course, you will be far more productive with InstEd, at no extra cost (and a much smaller download).