how do I make setup.py play nice with code that

Question

I'm creating a library, but the library is also an application. Therefore, I'm trying to make the code as painless as possible for people with no real background in programming. I decided to go along with suggestions in this post. However, I'm running into all sorts of issues. I want users to do

$ make config
$ make install

I need to do this because it's actually a C++/Python code, so I'm mixing them with Swig and Cmake. My objective is then to make those config and install targets so installing is a breeze. The first question I have is the following: If the contents of my setup.py file is as simple as

from setuptools import setup, find_packages

def read(*names, **kwargs):
    return io.open(
        join(dirname(__file__), *names),
        encoding=kwargs.get("encoding", "utf8")
    ).read()

setup(
    name="myproject",
    version="0.1.0",
)

and I type $ python setup.py build

How is it possible that the code is actually installed within pip?

$ pip freeze
-e git+https://svn.3me.tudelft.nl/git/myproject.git@92f08bfcbaf1f78a6acdf5f03b5c7a36e87800eb#egg=myproject

I improved the setup.py so that it also has dependencies:

setup(
    name="myproject",
    version="0.1.0",
    install_requires=[
        # eg: "aspectlib==1.1.1", "six>=1.7",
        "numpy", "scipy", "Sphinx", "pytest", "matplotlib", "dill"
    ],
)

and I put a requirements.txt as discussed in the link above:

--index-url https://pypi.python.org/simple/

-e . 

and I run pip install -r requirements.txt it actually installs all dependencies needed, but if I rerun it, it fails with

Exception:
Traceback (most recent call last):
  File "/Users/aaragon/.virtualenvs/test7/lib/python3.5/site-packages/pip/basecommand.py", line 215, in main
    status = self.run(options, args)
  File "/Users/aaragon/.virtualenvs/test7/lib/python3.5/site-packages/pip/commands/install.py", line 342, in run
    prefix=options.prefix_path,
  File "/Users/aaragon/.virtualenvs/test7/lib/python3.5/site-packages/pip/req/req_set.py", line 778, in install
    requirement.uninstall(auto_confirm=True)
  File "/Users/aaragon/.virtualenvs/test7/lib/python3.5/site-packages/pip/req/req_install.py", line 703, in uninstall
    '(at %s)' % (link_pointer, self.name, dist.location)
AssertionError: Egg-link /Users/aaragon/Local/myproject does not match installed location of myproject (at /Users/aaragon/Local/myproject/src)

why am I getting this error?