It's in the setup.py,line 24
package = dirpath[len_root_dir:].lstrip('/').replace('/', '.')
I think it should also consider the '\\'
package = dirpath[len_root_dir:].lstrip('/').replace('/',
'.').lstrip('\\').replace('\\', '.')
It's been fixed in trunk, just after 0.96 was released. So you could
grab setup.py from a recent subversion checkout and just drop that into
place without too much trouble (although you'll probably want an updated
version of MANIFEST.in as well).
Regards,
Malcolm