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Um, why is there a py2.4 egg on your python 2.5 path?

Setuptools configures itself according to the Python version
it is built with, so a 2.4 egg is not going to be correctly
configured for 2.5.  I don't know if this is related to your
problem or not, but I was unable to reproduce your problem
with a setuptools 0.7a1 checkout.  I was only able to
reproduce it with setuptools 0.6.