ActiveX in Protected mode IE7 on Vista

[volna1]

I am developing an activex control that launches an application. The activex is in the form of a dll and is packaged in a cab file. The control is invoked from a javascript, and works when protection mode is turned off in IE7 on Vista. However, it fails to launch the application when the protection mode is turned on. I found some information on requiring to include a manifest with requestedExecutionLevel in order to overcome this. I include the following manifest in the dll (had to use a different version of mt.exe - included with Windows SDK - than the one that is available with VS2005) and when I open the dll in Visual Studio, I can see the manifest included.

<?xml version="1.0" encoding="UTF-8" standalone="yes"?>
<assembly xmlns="urnTongue Tiedchemas-microsoft-com:asm.v1" manifestVersion="1.0">
<ms_asmv2:trustInfo xmlns:ms_asmv2="urnTongue Tiedchemas-microsoft-com:asm.v2">
<ms_asmv2Tongue Tiedecurity>
<ms_asmv2:requestedPrivileges>
<ms_asmv2:requestedExecutionLevel level="asInvoker" uiAccess="false"/>
</ms_asmv2:requestedPrivileges>
</ms_asmv2Tongue Tiedecurity>
</ms_asmv2:trustInfo>
</assembly>

I even tried including the manifest separately in the cab (also embedded in the dll), and including a reference in the inf file that is packaged in the cab file. I am wondering if I am missing something in order to overcome the protection mode issue in IE7.