I use the following approach for our multilanguage setups:
Switch to the "Organization \ Setup Design" panel. You should see that each of your components has the property "Condition".
If you want to include a file / component only for a specific language you should create a a component for each support language, for ex. "MyComponent_EN" for english and "MyComponent_DE" for german.
You can assign different conditions to the components, eg.
ProductLanguage=1033
If the component should only install if the user selected english and
ProductLanguage=1031
If the component should only install if the user selected german.
In the case you wan't the setup to install files for german but none for english then just don't create a component for english.
It is possible to create complexer conditions, as described here:
http://helpnet.installshield.com/installshield18helplib/IHelpBuildCondition.htm