Yes. This problem has many roots. Part of it is that build-improvements extracts the TeX file in the same directory as it latexs it. The problem can be papered over in many different way: (1) add .tex unconditionally. (2) replace .pamphlet with .tex and pay attention (3) extract to a different directory (4) find a btter solution.
(3) is not an option, since when you compile axiom.sty.tex --> axiom.sty.dvi then it does not matter whether axiom.sty is visible or not. \usepackage will choose the wrong file.
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