It appears that distutils isn't loading the authentication information from .pypirc. I ran this test on Python 3.2 64-bit on Windows.

PS C:\Users\jaraco\projects\hgtools> python -m pdb setup.py sdist upload
> c:\users\jaraco\projects\hgtools\setup.py(7)<module>()
-> """
(Pdb) b distutils/command/upload.py:179
Breakpoint 1 at c:\python\lib\distutils\command\upload.py:179
(Pdb) c
running sdist
running egg_info
# lines elided
Writing hgtools-1.0b1\setup.cfg
creating 'dist\hgtools-1.0b1.zip' and adding 'hgtools-1.0b1' to it
adding 'hgtools-1.0b1\.hgignore'
# lines elided
removing 'hgtools-1.0b1' (and everything under it)
running upload
Submitting dist\hgtools-1.0b1.zip to http://pypi.python.org/pypi
> c:\python\lib\distutils\command\upload.py(179)upload_file()
-> loglevel = log.INFO
(Pdb) auth
'Basic Og=='
(Pdb) user_pass
b':'
(Pdb) c
Upload failed (401): You must be identified to edit package information
The program finished and will be restarted
> c:\users\jaraco\projects\hgtools\setup.py(7)<module>()

I have a valid .pypirc that works in Python 2.7:

C:\Users\jaraco\projects\hgtools> cat C:\Users\jaraco\.pypirc
[server-login]
username=jason.coombs
password=omitted

[distutils]
index-servers =
    pypi

[pypi]
username: jaraco
password: omitted


I tried adding repository=http://www.python.org/pypi in [pypi], or supplying -r http://www.python.org/pypi, but that had no effect.

I tried adding -r pypi, but that elicited a new error.