From README.xml

 binpath    Specifies an optional directory from which the binaries will be pulled,
            instead of the default "bin/<arch>/<libc>" directory.

Snippet of my setup.xml

    <binary binpath="bin">
     test.bin
    </binary>

Instead of copying test.bin, it's trying to copy bin, which is a directory, and fails.

So I ran the setup binary with -v 0

loki_setup: find 'bin'

Changing setup.xml so it looks like:

    <binary arch="any" libc="any">
      test.bin
    </binary>

The output looks like this now:

loki_setup: find 'bin/Linux/x86/glibc-2.1/test.bin'
loki_setup: find 'bin/Linux/x86/test.bin'
loki_setup: find 'bin/x86/glibc-2.1/test.bin'
loki_setup: find 'bin/x86/test.bin'

This debug output is from copy.c line 793

If specifying binpath, this output only contains the path and not the binary.

So I tried this setup.xml

    <binary binpath="bin/test.bin">
     test.bin2
    </binary>

The output this time was:

loki_setup: find 'bin/test.bin'

So test.bin was installed instead of test.bin2.
I think the problem is line 770 in copy.c

changing this line to:

snprintf(binarylocations[0], PATH_MAX, "%s/%s", binpath, final);

should do the job correct.