Python not processing .pth files

[pnm]

This one I do not understand -- does anyone have any suggestions?
Newly compiled untweaked Python2.5 is not processing .pth files (as
far as I can see _any_ .pth files in site-packages. Example:.

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paul@phost:/usr/local/lib/python2.5/site-packages$ ls setup*
-rw-r--r-- 1 root staff 306K Mar 8 20:44 setuptools-0.6c3-py2.5.egg
-rw-rw-rw- 1 root staff 29 Mar 8 23:57 setuptools.pth
paul@phost:/usr/local/lib/python2.5/site-packages$ cat setuptools.pth
../setuptools-0.6c3-py2.5.egg
paul@phost:/usr/local/lib/python2.5/site-packages$ python2.5
Python 2.5 (r25:51908, Mar 8 2007, 22:34:54)
[GCC 3.3.5 (Debian 1:3.3.5-13)] on linux2
Type "help", "copyright", "credits" or "license" for more information.

>>import setuptools

Traceback (most recent call last):
File "<stdin>", line 1, in <module>
ImportError: No module named setuptools

>>import sys
sys.path

['', '/usr/local/lib/python25.zip', '/usr/local/lib/python2.5', '/usr/
local/lib/python2.5/plat-linux2', '/usr/local/lib/python2.5/lib-tk', '/
usr/local/lib/python2.5/lib-dynload', '/usr/local/lib/python2.5/site-
packages']

>>>

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