Thanks.
I've just fixed that bug.
Here's the patch relative to the latest test release
(ftp://alpha.gnu.org/gnu/fetish/fileutils-4.0q.tar.gz):

        * makepath.c (S_IRWXUGO): Define.
        (make_path): Always perform explicit chmod if MODE specifies any
        of the `special' permission bits.

Index: makepath.c
===================================================================
RCS file: /fetish/fileutils/lib/makepath.c,v
retrieving revision 1.41
retrieving revision 1.42
diff -u -r1.41 -r1.42
--- makepath.c  1999/12/13 07:30:57     1.41
+++ makepath.c  2000/04/26 12:36:43     1.42
@@ -1,5 +1,5 @@
 /* makepath.c -- Ensure that a directory path exists.
-   Copyright (C) 1990, 1997, 1998, 1999 Free Software Foundation, Inc.
+   Copyright (C) 1990, 1997, 1998, 1999, 2000 Free Software Foundation, Inc.
 
    This program is free software; you can redistribute it and/or modify
    it under the terms of the GNU General Public License as published by
@@ -50,6 +50,10 @@
 # define S_ISDIR(m) (((m) & S_IFMT) == S_IFDIR)
 #endif
 
+#ifndef S_IRWXUGO
+# define S_IRWXUGO (S_IRWXU | S_IRWXG | S_IRWXO)
+#endif
+
 #if STDC_HEADERS
 # include <stdlib.h>
 #endif
@@ -379,14 +383,18 @@
            {
              error (0, errno, _("cannot chown %s"), dirpath);
              retval = 1;
-           }
-         /* chown may have turned off some permission bits we wanted.  */
-         if ((mode & (S_ISUID | S_ISGID | S_ISVTX))
-             && chmod (basename_dir, mode))
-           {
-             error (0, errno, _("cannot chmod %s"), dirpath);
-             retval = 1;
            }
+       }
+
+      /* The above chown may have turned off some permission bits in MODE.
+        Another reason we may have to use chmod here is that mkdir(2) is
+        required to honor only the file permission bits.  In particular,
+        it may not have honored the `special' bits.  */
+      if ((mode & ~S_IRWXUGO)
+         && chmod (basename_dir, mode))
+       {
+         error (0, errno, _("cannot chmod %s"), dirpath);
+         retval = 1;
        }
 
       CLEANUP_CWD;

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