MSBuild plugin requires the path to the msbuild executable. Once the correct path provided, a warning messages, reading <Install Dir>\msbuild.exe is not a directory on the Jenkins master (but perhaps it exists on some slaves).

The only way to get rid of the warning is to specify a directory path, rather than the path to the executable as required. With only directory path specified, Jenkins fails to call msbuild.exe complaining that <Install Dir> is not recognized as a valid command.

Either the warning should not be issued or the plugin fixed to located the executable in the specified directory. The corresponding help entry and example hint that the executable is supposed to be located by the plugin:

Specify the path to your msbuild executable.

It is usually located at C:\WINDOWS\Microsoft.NET\Framework[version].

(from Jenkins MSBuild Plugin)