Tarek Ziadé <ziade.ta...@gmail.com> added the comment:

I figured out the problem after writing the test. This is not a problem
on distutils side but on setuptools side. If you remove setuptools from
lxml setup.py, it'll work perfectly.

setuptools patches distutils's build_ext and remove temporarely the
inplace option, so the code on distutils side that goes with the inplace
option is not called...

extract from setuptools.

{{{
    def run(self):
        """Build extensions in build directory, then copy if --inplace"""
        old_inplace, self.inplace = self.inplace, 0
        _build_ext.run(self)
        self.inplace = old_inplace
        if old_inplace:
            self.copy_extensions_to_source()

}}}

So this problem should be fixed on setuptools side.

----------
resolution:  -> invalid

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Python tracker <rep...@bugs.python.org>
<http://bugs.python.org/issue6365>
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