Please note that the timeout cannot be specified through the connection string. It is specified through the SQLSetConnectAttr function which sets the SQL_ATTR_LOGIN_TIMEOUT parameter.
The connection is made through the SQLDriverConnect API which uses the connection timeout specified in the connection environment attributes, therefore the "Connect Timeout" in your string is ignored.
There are two solutions for this:
1) You wait until the we release the 6.2 version of Advanced Installer (a couple of weeks). This version will include a feature which allows you to specify the timeout you need.
2) You contact me at support at advancedinstaller dot com and I will send you a DLL used by Advanced Installer for the SQL connection. In this DLL we will hard-code the timeout you need and you can use it to build your package (please specify the timeout you want it if you need this DLL).