This is caused by a bug in cpphs, which is used in preparing the libraries for Hugs. Simple test case:
% cat test {- #if 1 foo #else bar #endif -} % cpphs --noline test {- #if 1 foo #else -} -- To UNSUBSCRIBE, email to [EMAIL PROTECTED] with a subject of "unsubscribe". Trouble? Contact [EMAIL PROTECTED]