ubuntu 11.04 has native python2.7 i build python2.5 from source to /usr/local/python2.5/bin, and try to install lxml for my custom python2.5 install. Also i use virtualenv.
From this thread I found, they seemed to be stating that the problem might be caused by the program being compiled against the wrong Python version. 2.7 vs 2.5, it might be the cause of the problem for you. Check your sys.path and see if it's using the 2.7 version, and that just might be the source of your problem!
If it's not using the 2.7 one, maybe it was still compiled incorrectly on your system anyways. Maybe it's a packaging error on your distro.