OE changes to installed=no which means we can't run the original test
and just look in $objdir. We therefore look in both, preferring 
$objdir if it exists - RP 29/11/2007

--- libtool-1.5.10/ltmain.in.orig
+++ libtool-1.5.10/ltmain.in
@@ -3105,8 +3105,11 @@
 		  fi
 		  ;;
 		esac
-		if grep "^installed=no" $deplib > /dev/null; then
-		  path="$absdir/$objdir"
+#		OE changes to installed=no which means we can't run the original test
+#		and just look in $objdir. We therefore look in both, preferring 
+#		$objdir if it exists, see below. - RP 29/11/2007
+#		if grep "^installed=no" $deplib > /dev/null; then
+#		  path="$absdir/$objdir"
 #		This interferes with crosscompilation. -CL
 #		else
 #		  eval libdir=`${SED} -n -e 's/^libdir=\(.*\)$/\1/p' $deplib`
@@ -3117,7 +3120,7 @@
 #		  if test "$absdir" != "$libdir"; then
 #		    $echo "$modename: warning: \`$deplib' seems to be moved" 1>&2
 #		  fi
-		else
+		if ! grep "^installed=no" $deplib > /dev/null; then
 		  eval libdir=`${SED} -n -e 's/^libdir=\(.*\)$/\1/p' $deplib`
 		  if test -z "$libdir"; then
 		    $echo "$modename: \`$deplib' is not a valid libtool archive" 1>&2
@@ -3138,9 +3141,17 @@
 		    for tmp in $deplibrary_names ; do
 		      depdepl=$tmp
 		    done
-		    if test -f "$path/$depdepl" ; then
-		      depdepl="$path/$depdepl"
+
+		    if test -f "$absdir/$objdir/$depdepl" ; then
+		      depdepl="$absdir/$objdir/$depdepl"
+		      path="$absdir/$objdir"
+		    elif test -f "$absdir/$depdepl" ; then
+		      depdepl="$absdir/$depdepl"
+		      path="$absdir"
+		    else
+		      path="$absdir/$objdir"
 		    fi
+		    
 		    # do not add paths which are already there
 		    case " $newlib_search_path " in
 		    *" $path "*) ;;
@@ -3150,7 +3161,13 @@
 		  path=""
 		  ;;
 		*)
-		  path="-L$path"
+		  if test -d "$absdir/$objdir" ; then
+		    path="-L$absdir/$objdir"
+		  elif test -d "$absdir" ; then
+		    path="-L$absdir"
+		  else
+		    path="-L$absdir/$objdir"
+		  fi
 		  ;;
 		esac
 		;;