To install Quixote, two steps are required.
Python contains a set of modules -- the compiler package -- for parsing Python source code and generating Python bytecode, and the PTL compiler is built on top of it. With Python 2.0 and 2.1, this package was included in Python's source distribution, but not installed as part of the standard library.
Thus, if you haven't upgraded to Python 2.2 yet, you'll need to install the compiler package yourself. Assuming your Python source distribution is in /tmp/Python-2.1.2:
cd /tmp/Python-2.1.2/Tools/compiler python setup.py install
(Obviously, you'll have to adjust this to reflect your Python version and where you kept the source distribution after installing Python.)
If you're running Python 2.2 (or later), this step is unnecessary.
Quixote 0.6 changes the quixote.form.form module from PTL to Python code. You should delete or move the existing quixote/ directory in site-packages before running setup.py, or at least delete the old form.ptl and form.ptlc files.
Simply run:
python setup.py install
The quixote package and its subpackages will be copied into the appropriate directory for site-specific packages.