This appears to be a new issue with Python 2.5
Building Python 2.5 on Fedora Core 5:

./configure --prefix=/ --enable-shared
make

fails to build the C modules, as a "-L." is missing from the gcc command line used to generate the module.so file from the module.o file.

Using any other value for --prefix works.

Setting the environment variable LDFLAGS to "-L." before running ./configure appears to be a successful workaround.

Here is a representative failure (all the C modules fail).  Note the "cannot find -lpython2.5" message; this is because -L. is missing frmo the gcc command line.

building 'crypt' extension
gcc -pthread -fPIC -fno-strict-aliasing -DNDEBUG -g -O3 -Wall -Wstrict-prototypes -I. -I/local/home/jas/Software/Languages/Python/Python-2.5/./Include -I./Include -I. -I/usr/local/include -I/local/home/jas/Software/Languages/Python/Python-2.5/Include -I/local/home/jas/Software/Languages/Python/Python-2.5 -c /local/home/jas/Software/Languages/Python/Python-2.5/Modules/cryptmodule.c -o build/temp.linux-i686-2.5/local/home/jas/Software/Languages/Python/Python-2.5/Modules/cryptmodule.o
gcc -pthread -shared build/temp.linux-i686-2.5/local/home/jas/Software/Languages/Python/Python-2.5/Modules/cryptmodule.o -L//lib -L/usr/local/lib -L/lib/python2.5/config -lcrypt -lpython2.5 -o build/lib.linux-i686-2.5/crypt.so
/usr/bin/ld: cannot find -lpython2.5
collect2: ld returned 1 exit status

Closing, since this is ancient. Please, open a new bug if still relevant (for 2.7, 3.2 or 3.3).

I took the five minutes to test this.  It does not fail in 2.7.  I remember we fixed some other issues with '-prefix=/', so I presume this got fixed at that time as a byproduct.  Either that, or it was a Fedora bug of some sort.