Verified for setuptools==0.6c12dev-r75926

Fix is now in trunk and branch; to test, "easy_install setuptools==dev06". 
Please let me know if it fixes your problem.  Thanks for the report!

setuptools/package_index.py throws an AttributeError in Python 2.3 due to

auth, host = urllib2.splituser(netloc)

It either needs the following monkey patch, or simply use splituser from urllib.

import urllib
import urllib2
if not hasattr(urllib2, 'splituser'):
    # setuptools wants to import this from urllib2 but it's not
    # in there in Python 2.3.3, so we just alias it.
    urllib2.splituser = urllib.splituser