I want to enhance my UI dialog of MSI using Wix. Can you point out me the best tool which provides an option to create such UI? Also, is there possible to show animated GIF image in MSI wizard
You want to look into "Embedded UI" (also sometimes called "External UI"). But once you go down this path, you have to provide the entire UI, and nothing in InstallUISequence gets run (like Costing).
There is a sample Embedded UI in Wix that demos a WPF UI and a prgress bar that reacts to what is going on in the MSI installation.
A middle-ground option is to create some Custom Actions that display a UI. I do this to accomplish things like looking up a user in AD, search for SQL Servers on the network, browsing for databases in a SQL Server, and browsing for SSL Certificates. You can then trigger these custom actions through a push button.
As far as animated GIFs go - as far as I know they are not supported.
May be you can have a look at NvnInstaller.MsiDotNet library which is shipped with Nvn Installer. Create a windows application using library and that library controls whole installation process. It is created using .Net framework 2. So you can use any .Net technology like WPF etc to create your installer user interface.