Is there any chance you had first tried it as an AIR app, then changed to iPhone? I'm guessing so, because application.installFolder is one of the things that gets created if you do that.
So, open the descriptor file in a text editor (it's the file called "appname-app.xml", where "appname" would be the same as the FLA name), and look for the part that says this:
where "here" may be empty, or some other text. Select and delete that part, and do a save. Then in Flash do a Publish from the file menu.
Everything should be ok then, but if you get more errors, just see what it's complaining about and delete the part it doesn't like from the descriptor file.