The Mercurial plugin for Setuptools available here:

http://cheeseshop.python.org/pypi/hg.setuptools/

will render setuptool unusable outside of a Mercurial repository.

Here is a patch to solve the problem:

http://ygingras.net/files/hg.setuptools-without-a-repo.diff

and a patched release:

http://ygingras.net/files/hg.setuptools-0.1.1.tar.gz http://ygingras.net/files/hg.setuptools-0.1.1.zip http://ygingras.net/files/hg.setuptools-0.1.1-py2.4.egg http://ygingras.net/files/hg.setuptools-0.1.1-py2.5.egg

I submitted the patch to the maintainer but I'm still without news from him. I hope this will help anyone who wants to use the plugin before an official bugfix release is out.