Looks like this has exposed some ugly code.  From setup.py:

  # Figure out the location of the source code for extension modules
  # (This logic is copied in distutils.test.test_sysconfig,
  # so building in a separate directory does not break test_distutils.)

I believe the proper fix is to move some of the code from setup.py into
sysconfig so that it does more than just set "python_build" when running
inside a Python build directory.  For example, it should also add
<srcdir>/Include to the standard list of includes that distutils uses.

The attached patch fixes test_build_ext.py to use the right source file
(perhaps it should be tested on Windows).  The test still fails because
Python.h cannot be found.