libpng/png.h: accepted by the compiler, rejected by the preprocessor!

[Techops Test]

Solaris 9 with GCC 3.3.2 building espgs-7.07.1

CFLAGS=-I/usr/sfw/include -I/usr/sfw/include/libpng10
LDFLAGS=-L/usr/sfw/lib -R/usr/sfw/lib


./configure --prefix=/usr/local --enable-cups

...
checking for local png library source... no
checking for png_check_sig in -lpng... yes
checking png.h usability... yes
checking png.h presence... no
configure: WARNING: png.h: accepted by the compiler, rejected by the 
preprocessor!
configure: WARNING: png.h: proceeding with the preprocessor's result
configure: WARNING:     ## ------------------------------------ ##
configure: WARNING:     ## Report this to address@hidden ##
configure: WARNING:     ## ------------------------------------ ##
checking for png.h... no
checking libpng/png.h usability... yes
checking libpng/png.h presence... no
configure: WARNING: libpng/png.h: accepted by the compiler, rejected by 
the preprocessor!
configure: WARNING: libpng/png.h: proceeding with the preprocessor's result
configure: WARNING:     ## ------------------------------------ ##
configure: WARNING:     ## Report this to address@hidden ##
configure: WARNING:     ## ------------------------------------ ##
checking for libpng/png.h... no
checking for cups-config... no
...

png libs located in /usr/sfw/include - part of Sun's Gnome install


from config.log:
------------
configure:4640: checking png.h usability
configure:4653: gcc -c -I/usr/sfw/include -I/usr/sfw/include/libpng10  
conftest.c >&5
configure:4656: $? = 0
configure:4659: test -s conftest.o
configure:4662: $? = 0
configure:4672: result: yes
configure:4676: checking png.h presence
configure:4687: gcc -E  conftest.c
configure:4716:17: png.h: No such file or directory
configure:4693: $? = 1
configure: failed program was:
| #line 4678 "configure"
| /* confdefs.h.  */
|
| #define PACKAGE_NAME ""
| #define PACKAGE_TARNAME ""
| #define PACKAGE_VERSION ""
| #define PACKAGE_STRING ""
| #define PACKAGE_BUGREPORT ""
| #ifdef __cplusplus
| #include <stdlib.h>
| #endif
| #define HAVE_DIRENT_H 1
| #define STDC_HEADERS 1
| #define HAVE_SYS_TYPES_H 1
| #define HAVE_SYS_STAT_H 1
| #define HAVE_STDLIB_H 1
| #define HAVE_STRING_H 1
| #define HAVE_MEMORY_H 1
| #define HAVE_STRINGS_H 1
| #define HAVE_INTTYPES_H 1
| #define HAVE_UNISTD_H 1
| #define HAVE_ERRNO_H 1
| #define HAVE_FCNTL_H 1
| #define HAVE_LIMITS_H 1
| #define HAVE_MALLOC_H 1
| #define HAVE_MEMORY_H 1
| #define HAVE_STDLIB_H 1
| #define HAVE_STRING_H 1
| #define HAVE_STRINGS_H 1
| #define HAVE_SYS_IOCTL_H 1
| #define HAVE_SYS_PARAM_H 1
| #define HAVE_SYS_TIME_H 1
| #define HAVE_SYSLOG_H 1
| #define HAVE_UNISTD_H 1
| #define HAVE_STRUCT_STAT_ST_BLOCKS 1
| #define HAVE_ST_BLOCKS 1
| #define TIME_WITH_SYS_TIME 1
| #define HAVE_LIBM 1
| /* end confdefs.h.  */
| #include <png.h>
configure:4712: result: no
configure:4718: WARNING: png.h: accepted by the compiler, rejected by 
the preprocessor!
configure:4720: WARNING: png.h: proceeding with the preprocessor's result
configure:4748: checking for png.h
configure:4755: result: no
configure:4777: checking libpng/png.h usability
configure:4790: gcc -c -I/usr/sfw/include -I/usr/sfw/include/libpng10  
conftest.c >&5
configure:4793: $? = 0
configure:4796: test -s conftest.o
configure:4799: $? = 0
configure:4809: result: yes
configure:4813: checking libpng/png.h presence
configure:4824: gcc -E  conftest.c
configure:4853:24: libpng/png.h: No such file or directory
configure:4830: $? = 1
configure: failed program was:
| #line 4815 "configure"
| /* confdefs.h.  */
|
| #define PACKAGE_NAME ""
| #define PACKAGE_TARNAME ""
| #define PACKAGE_VERSION ""
| #define PACKAGE_STRING ""
| #define PACKAGE_BUGREPORT ""
| #ifdef __cplusplus
| #include <stdlib.h>
| #endif
| #define HAVE_DIRENT_H 1
| #define STDC_HEADERS 1
| #define HAVE_SYS_TYPES_H 1
| #define HAVE_SYS_STAT_H 1
| #define HAVE_STDLIB_H 1
| #define HAVE_STRING_H 1
| #define HAVE_MEMORY_H 1
| #define HAVE_STRINGS_H 1
| #define HAVE_INTTYPES_H 1
| #define HAVE_UNISTD_H 1
| #define HAVE_ERRNO_H 1
| #define HAVE_FCNTL_H 1
| #define HAVE_LIMITS_H 1
| #define HAVE_MALLOC_H 1
| #define HAVE_MEMORY_H 1
| #define HAVE_STDLIB_H 1
| #define HAVE_STRING_H 1
| #define HAVE_STRINGS_H 1
| #define HAVE_SYS_IOCTL_H 1
| #define HAVE_SYS_PARAM_H 1
| #define HAVE_SYS_TIME_H 1
| #define HAVE_SYSLOG_H 1
| #define HAVE_UNISTD_H 1
| #define HAVE_STRUCT_STAT_ST_BLOCKS 1
| #define HAVE_ST_BLOCKS 1
| #define TIME_WITH_SYS_TIME 1
| #define HAVE_LIBM 1
| /* end confdefs.h.  */
| #include <libpng/png.h>
configure:4849: result: no
configure:4855: WARNING: libpng/png.h: accepted by the compiler, 
rejected by the preprocessor!
configure:4857: WARNING: libpng/png.h: proceeding with the 
preprocessor's result
configure:4885: checking for libpng/png.h
configure:4892: result: no