settings.xml profile activation breaks reactor
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         Key: MNG-776
         URL: http://jira.codehaus.org/browse/MNG-776
     Project: Maven 2
        Type: Bug
    Versions: 2.0-beta-1    
 Environment: Windows XP, Cygwin
 Reporter: Mark Hobson
    Priority: Blocker
 Attachments: setup.zip

The attached zip consists of:

1) Parent POM project A
2) Child JAR project B
3) settings.xml

Running m2 in the 'a' dir:

m2 -s ../settings.xml install

Results in a failed build - m2 looks for B's POM at a/b/b/pom.xml rather than 
a/b/pom.xml.

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