I got it working with Python 2.5. Here are the modified steps:
Code:
cd /pythonraw1394
nano Makefile
# modify lines as follows:
_raw1394.so: raw1394_wrap.c /usr/include/python2.5
$(CC) -Wall -shared -fPIC -I/usr/include/python2.5 -I/usr/local/include/libraw1394 raw1394_wrap.c -lraw1394 -o _raw1394.so
No other modification to the install were needed. I didnt modify businfo or winlockpwn.
I successfully wiped the password for a locked Windows XP SP2 machine! Ctrl+Alt+Del and Enter. No password needed. 
Update:
After running this successfully, I am unable to run it again without restarting Backtrack. I believe the businfo retains the settings for the PC you first plug into. Any way to clear the 1394 settings (maybe take the device down?) and bring it back up in the clear?
William