The class your custom action is in should inherit from System.Configuration.Installer.Installer. This has a parameter on it called Context which has a Parameters dictionary. The dictionary contains a number of useful variables about the install and you can add some.
Once you have added the custom installer to your install project in the Custom Actions pain. Select the Install action and set the CustomActionData property to:
/targetdir="[TARGETDIR]\"
Then you can access the path like this:
[RunInstaller(true)]
public partial class CustomInstaller : System.Configuration.Install.Installer
{
public override void Install(System.Collections.IDictionary stateSaver)
{
base.Install(stateSaver);
string path = this.Context.Parameters["targetdir"];
// Do something with path.
}
}