Distutils should tell swig to create it's C wrapper file into the
temporary directory (eg. build/temp.linux-i686-2.5) and to write the
language specific files to the library directory (eg.
build/lib.linux-i686-2.5).

Rationale:
Without the language specific files, python swig extensions won't be
able to run, so they should definetly be distributed by distutils.
The wrapper files are build by-products and should therefore be in the
temporary directory, so they get cleaned up on "setup.py clean".

Can you provide a patch?

Without having it tested very much, the attached patch fixes this issue
for me.

Note that the language specific files can't be handled via py_modules
because this is processed before their generation.

I noticed that my patch did not work for absolute directory names and
adjusted the matching to fix this.

Same with issue1016626?

Except that the _wrap.c file would still be created at the wrong place,
yes, you're right.

Distutils is now deprecated (see PEP 632) and all tagged issues are being closed. From now until removal, only release blocking issues will be considered for distutils.

If this issue does not relate to distutils, please remove the component and reopen it. If you believe it still requires a fix, most likely the issue should be re-reported at https://github.com/pypa/setuptools