diff --git a/build/apu-conf.m4 b/build/apu-conf.m4
index f003576..7e8dc91 100644
--- a/build/apu-conf.m4
+++ b/build/apu-conf.m4
@@ -15,28 +15,46 @@
         AC_MSG_ERROR(You need to specify a directory with --with-apr)
     fi
     absdir="`cd $withval ; pwd`"
-    if test -f "$absdir/apr_pools.h"; then
+    if test -f "$absdir/apr.h"; then
 	APR_INCLUDES="$absdir"
-    elif test -f "$absdir/include/apr_pools.h"; then
-	APR_SOURCE_DIR="$absdir"
+    elif test -f "$absdir/include/apr.h"; then
+	APR_BUILD_DIR="$absdir"
     fi
 ],[
     dnl see if we can find APR
-    if test -f "$srcdir/apr/include/apr_pools.h"; then
-	APR_SOURCE_DIR="$srcdir/apr"
-    elif test -f "$srcdir/../apr/include/apr_pools.h"; then
-	APR_SOURCE_DIR="`cd $srcdir/../apr ; pwd`"
+    if test -f "$srcdir/apr/include/apr.h"; then
+	APR_BUILD_DIR="$srcdir/apr"
+    elif test -f "$srcdir/../apr/include/apr.h"; then
+	APR_BUILD_DIR="`cd $srcdir/../apr ; pwd`"
     fi
 ])
-if test -n "$APR_SOURCE_DIR"; then
-    APR_INCLUDES="$APR_SOURCE_DIR/include"
+
+dnl
+dnl grab flags from APR.
+dnl ### APR doesn't have "nice" names for its exports (yet), but it isn't
+dnl ### a problem to deal with them right here
+dnl
+
+. "$APR_BUILD_DIR/APRVARS"
+APR_EXPORT_CPPFLAGS="$EXTRA_CPPFLAGS"
+APR_EXPORT_CFLAGS="$EXTRA_CFLAGS"
+APR_EXPORT_LIBS="$EXTRA_LIBS"
+
+if test -n "$APR_BUILD_DIR"; then
+    APR_INCLUDES="-I$APR_BUILD_DIR/include"
+    if test "$APR_BUILD_DIR" != "$APR_SOURCE_DIR"; then
+        APR_INCLUDES="$APR_INCLUDES -I$APR_SOURCE_DIR/include"
+    fi
 fi
+
 if test -z "$APR_INCLUDES"; then
     AC_MSG_RESULT(not found)
     AC_MSG_ERROR(APR could not be located. Please use the --with-apr option.)
 fi
+
 AC_MSG_RESULT($APR_INCLUDES)
 
+AC_SUBST(APR_BUILD_DIR)
 AC_SUBST(APR_SOURCE_DIR)
 ])
 
@@ -353,7 +371,7 @@
 ])
 
 if test -z "$expat_include_dir"; then
-  for d in /usr /usr/local xml/expat-cvs xml/expat ; do
+  for d in /usr /usr/local xml/expat-cvs xml/expat $srcdir/xml/expat ; do
     APU_TEST_EXPAT($d)
     if test -n "$expat_include_dir"; then
       break
@@ -376,6 +394,15 @@
   expat_libs=$top_builddir/$bundled_subdir/lib/libexpat.la
   APR_XML_SUBDIRS="`echo $bundled_subdir | sed -e 's%xml/%%'`"
 fi
+if test "$expat_include_dir" = "$srcdir/xml/expat/include" -o "$expat_include_dir" = "$srcdir/xml/expat/lib"; then
+  dnl This is a bit of a hack.  This only works because we know that
+  dnl we are working with the bundled version of the software.
+  bundled_subdir="xml/expat"
+  APU_SUBDIR_CONFIG($bundled_subdir)
+  expat_include_dir=$top_builddir/$bundled_subdir/lib
+  expat_libs=$top_builddir/$bundled_subdir/lib/libexpat.la
+  APR_XML_SUBDIRS="`echo $bundled_subdir | sed -e 's%xml/%%'`"
+fi
 AC_SUBST(APR_XML_SUBDIRS)
 
 INCLUDES="$INCLUDES -I$expat_include_dir"
diff --git a/build/rules.mk.in b/build/rules.mk.in
index 50bdaba..a8cb025 100644
--- a/build/rules.mk.in
+++ b/build/rules.mk.in
@@ -60,6 +60,8 @@
 # Configuration variables
 #
 top_builddir=@top_builddir@
+top_srcdir=@top_srcdir@
+APR_BUILD_DIR=@APR_BUILD_DIR@
 APR_SOURCE_DIR=@APR_SOURCE_DIR@
 
 CC=@CC@
diff --git a/configure.in b/configure.in
index fc7751c..f1ec5a7 100644
--- a/configure.in
+++ b/configure.in
@@ -12,18 +12,31 @@
 AC_PROG_AWK
 AC_CHECK_PROG(RM, rm, rm)
 
+dnl Absolute source/build directory
+abs_srcdir=`(cd $srcdir && pwd)`
+abs_builddir=`pwd`
+ 
+if test "$abs_builddir" != "$abs_srcdir"; then
+  USE_VPATH=1
+fi
+
 dnl
 dnl compute the top directory of the build
 dnl note: this is needed for LIBTOOL and exporting the bundled Expat
 dnl
-top_builddir="`cd $srcdir ; pwd`"
+top_builddir="$abs_builddir"
 AC_SUBST(top_builddir)
+AC_SUBST(abs_srcdir)
 
 dnl
 dnl set up the compilation flags and stuff
 dnl
 INCLUDES="$INCLUDES -I\$(top_builddir)/include/private -I\$(top_builddir)/include"
 
+if test -n "$USE_VPATH"; then
+    INCLUDES="$INCLUDES -I\$(top_srcdir)/include"
+fi
+
 dnl
 dnl 1. Find the APR includes directory and (possibly) the source (base) dir.
 dnl 2. Determine what DBM backend type to use.
@@ -33,7 +46,7 @@
 APU_CHECK_DBM
 APU_FIND_EXPAT
 
-INCLUDES="$INCLUDES -I$APR_INCLUDES"
+INCLUDES="$INCLUDES $APR_INCLUDES"
 
 dnl
 dnl prep libtool
@@ -96,16 +109,6 @@
 AC_SUBST(EXPAT_LINK)
 
 dnl
-dnl grab flags from APR.
-dnl ### APR doesn't have "nice" names for its exports (yet), but it isn't
-dnl ### a problem to deal with them right here
-dnl
-. "$APR_SOURCE_DIR/APRVARS"
-APR_EXPORT_CPPFLAGS="$EXTRA_CPPFLAGS"
-APR_EXPORT_CFLAGS="$EXTRA_CFLAGS"
-APR_EXPORT_LIBS="$EXTRA_LIBS"
-
-dnl
 dnl Prep all the flags and stuff for compilation and export to other builds
 dnl
 CFLAGS="$CFLAGS $INCLUDES $APR_EXPORT_CFLAGS $APR_EXPORT_CPPFLAGS"
@@ -133,21 +136,31 @@
 
 dnl
 dnl everthing is done. 
+MAKEFILES=" Makefile build/Makefile buckets/Makefile crypto/Makefile dbm/Makefile dbm/sdbm/Makefile encoding/Makefile hooks/Makefile uri/Makefile xml/Makefile misc/Makefile $test_Makefile"
 AC_OUTPUT([
-	Makefile
 	export_vars.sh
-	build/Makefile
 	build/rules.mk
 	include/private/apu_select_dbm.h
         include/apu.h
-	buckets/Makefile
-	crypto/Makefile
-	dbm/Makefile
-	dbm/sdbm/Makefile
-	encoding/Makefile
-	hooks/Makefile
-	uri/Makefile
-	xml/Makefile
-	misc/Makefile
-	$test_Makefile
+        $MAKEFILES
 	])
+
+dnl #----------------------------- Fixup Makefiles for VPATH support
+ 
+changequote({,})
+ 
+if test -n "$USE_VPATH"; then
+  for makefile in $MAKEFILES; do
+    dir=`echo $makefile|sed 's%[^/][^/]*$%%'`
+    (cat <<EOF
+srcdir = $abs_srcdir/$dir
+VPATH  = $abs_srcdir/$dir
+ 
+EOF
+)    |  cat - $makefile > tmp
+    cp tmp $makefile
+  done
+  rm -f tmp
+fi
+ 
+changequote([,])
diff --git a/uri/Makefile.in b/uri/Makefile.in
index e875009..4c7e398 100644
--- a/uri/Makefile.in
+++ b/uri/Makefile.in
@@ -11,4 +11,4 @@
 apr_uri.lo: uri_delims.h
 
 uri_delims.h: gen_uri_delims
-	./gen_uri_delims > uri_delims.h
+	./gen_uri_delims > $(top_builddir)/include/private/uri_delims.h
diff --git a/xml/expat/configure.in b/xml/expat/configure.in
index 9c04bf0..b8df47b 100644
--- a/xml/expat/configure.in
+++ b/xml/expat/configure.in
@@ -58,6 +58,9 @@
     ;;
 esac
 
+blddir=`pwd`
+AC_SUBST(blddir)
+
 AC_SUBST(PACKAGE)
 AC_SUBST(VERSION)
 AC_SUBST(EXPAT_MAJOR_VERSION)
diff --git a/xml/expat/lib/Makefile.in b/xml/expat/lib/Makefile.in
index a2ea2cd..d9d9f06 100644
--- a/xml/expat/lib/Makefile.in
+++ b/xml/expat/lib/Makefile.in
@@ -27,6 +27,7 @@
 prefix = @prefix@
 exec_prefix = @exec_prefix@
 
+blddir = @blddir@/lib
 bindir = @bindir@
 sbindir = @sbindir@
 libexecdir = @libexecdir@
@@ -77,7 +78,7 @@
 CONFIG_HEADER = ../config.h
 CONFIG_CLEAN_FILES = 
 
-INCLUDES = -I$(srcdir) -I..
+INCLUDES = -I$(srcdir) -I.. -I$(blddir)
 DEFS = @DEFS@ -DPACKAGE='"$(PACKAGE)"' -DVERSION='"$(PACKAGE)_$(VERSION)"'
 
 CPPFLAGS = @CPPFLAGS@