Where does Python look for libraries?

[ACB]

I have been trying to get the gdmodule installed and have run into an issue.
When I import gd I get the following error.

>>> import gd
Traceback (most recent call last):
  File "<stdin>", line 1, in ?
  File "/usr/local/lib/python2.3/site-packages/gd.py", line 10, in ?
    import _gd
ImportError: /usr/local/lib/libgd.so.2: Undefined symbol "libiconv_open"

But, when I run
nm libiconv.so
in the directory with the iconv library I get an entry like this
00011fe0 T libiconv_open

so I know the functionality is there.  So, my question.  Does python have a 
way to add search directories for locating libraries?

Thanks.