In InstallAware Express...
On the "Files" tab, in the "Target Folders" listbox, the target folder "$TARGETDIR$ does not get listed as an available folder until after you have added a file and then edited the file to change the "Target Path" to "$TARGETDIR$".
This is currently by design. If you create a project using the Project Wizard and specify some files to install, the TARGETDIR folder will be pre-defined for you.
As nothing is hard-coded in InstallAware, the TARGETDIR variable is also not hard-coded, and won't appear until actually used by an Install Files command.
Those show, because they are system folders and their values are obtained before showing setup dialogs, using scripting commands in the setup script that Express maintains for you underneath the visual views.
Since TARGETDIR is not such a folder...it is not shown. Again if you use the Project Wizard and add some files to your target folder...you'll have bypassed this issue.