And here is the working jam file using two separate locations:

$ cat Jamfile.v2
project /boost/iostreams : source-location ../src ;

local sources = file_descriptor.cpp mapped_file.cpp zlib.cpp gzip.cpp bzip2.cpp ;

lib zlib
    :
    : <name>z <include>/home/fwyzard/src/boost/zlib-1.2.10 <search>/home/fwyzard/src/boost/zlib-1.2.10
    ;

lib bzip2
    :
    : <name>bz2 <include>/home/fwyzard/src/boost/bzip2-1.0.6 <search>/home/fwyzard/src/boost/bzip2-1.0.6
    ;

lib boost_iostreams
    : $(sources)
    : <link>shared:<define>BOOST_IOSTREAMS_DYN_LINK=1
      <define>BOOST_IOSTREAMS_USE_DEPRECATED
      <library>zlib
      <library>bzip2
    :
    : <link>shared:<define>BOOST_IOSTREAMS_DYN_LINK=1
    ;

boost-install boost_iostreams : bzip2-requirements ;


.Andrea

--
Strategy is a system of expedients.

Generalfeldmarschall Helmuth Karl Bernhard Graf von Moltke