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On Ubuntu 10.10, I am unable to install lxml to python 2.7. Here are the steps I take.

sudo su -
apt-get install python2.7
apt-get install python-lxml
Note when running the install for python-lxml package, the following appeared:

INFO: using unknown version '/usr/bin/python2.7' (debian_defaults not up-to-date?)"
Importing the module in python2.6 (the version that comes standard with Ubuntu) works. However, importing the module under python2.7 does not.