distutils will currently try to use hardlinks if os has a 'link' attribute, however sometimes os.link() will fail, for example the filesystem may not support it (see attached traceback).

in commands/sdist.py in make_release_tree() there is the test:
        if hasattr(os, 'link'):        # can make hard links on this system
            link = 'hard'
            msg = "making hard links in %s..." % base_dir

'link' is then passed to copy_file() in file_util.py, which trusts that if link == 'hard', then hardlinking will work.

there has been discussion in the past, but i dont think it has been fixed
http://thread.gmane.org/gmane.comp.python.distutils.devel/2076