I'm trying to run the following command to compile a driver (taken from here http://acx100.erley.org/howto.txt):

make -C /lib/modules/`uname -r`/build M=`pwd`

Which gives:

make: *** /lib/modules/2.6.17-5mdv/build: No such file or directory. Stop.

Now, as far as I know, this is where the kernel source is usually stored in most distros. However, in Mandriva 2007 (i586), there simply is no /lib/modules/2.6.17-5mdv/build directory at all.

However, the package manager says the source is installed.

What should I do? Try reinstalling the kernel source RPM? Please help.

What directories do you have in /lib/modules/ ?
One of them should match the output of uname -r (which is the kernel you are running).
Maybe you have the wrong source for your installed kernel?

/lib/modules:

drwxr-xr-x 3 root root 1024 Oct 22 15:16 2.6.17-5mdv/
drwxr-xr-x 3 root root 1024 Oct 22 15:16 fglrx/


/lib/modules/2.6.17-5mdv/

drwxr-xr-x 11 root root 1024 Oct 22 11:22 kernel/
-rw-r--r-- 1 root root 310891 Oct 22 15:16 modules.alias
-rw-r--r-- 1 root root 69 Oct 22 15:16 modules.ccwmap
-rw-r--r-- 1 root root 333059 Oct 22 15:16 modules.dep
-rw-r--r-- 1 root root 62937 Sep 13 14:14 modules.description
-rw-r--r-- 1 root root 887 Oct 22 15:16 modules.ieee1394map
-rw-r--r-- 1 root root 730 Oct 22 15:16 modules.inputmap
-rw-r--r-- 1 root root 21762 Oct 22 15:16 modules.isapnpmap
-rw-r--r-- 1 root root 74 Oct 22 15:16 modules.ofmap
-rw-r--r-- 1 root root 245162 Oct 22 15:16 modules.pcimap
-rw-r--r-- 1 root root 1051 Oct 22 15:16 modules.seriomap
-rw-r--r-- 1 root root 133743 Oct 22 15:16 modules.symbols
-rw-r--r-- 1 root root 361465 Oct 22 15:16 modules.usbmap

What is this reference to 'build' asking for- what is build? Is it a program that needs to be installed?

On my machine /lib/modules/2.4.21-0.13MWAmdk/build is a link to /usr/src/linux-2.4.21-0.13MWAmdk
So maybe you should make a similar link to your kernel source.

My machine doesn't have that dir.

Come on, someone must know what the heck this 'build' thing is wanting, what is the significance of this

make -C /lib/modules/`uname -r`/build M=`pwd`

what is it making and what is the 'build' directory?

Do you have your source files installed?? Do rpm -qa | grep kernel. (as root)
For me this brings up

kernel-source-2.6.17.6mdv-1-1mdv2007.0
kernel-2.6.17.6mdv-1-1mdv2007.0

Amongst kernels. If you do not have the corresponding source file (kernel-source) that matches your running kernel then this is the problem. I apologise in advance if you do have the sources installed and the problem is more complex its just that i had a similar problem that eluded me for a while and it was because i had the kernel-source-stripped installed. Cheers
Graham