This bug is in the 1.8.x series of xserver. I couldn't get the master branch to build because of missing dependencies, so I don't know whether it's fixed yet. When running configure with no extra arguments, you will end up with FONTPATH set to ${FONTROOTDIR}/misc/,${FONTROOTDIR}/TTF/,${FONTROOTDIR}/OTF/,${FONTROOTDIR}/Type1/,${FONTROOTDIR}/100dpi/,${FONTROOTDIR}/75dpi/ ${FONTROOTDIR} in turn is defined as ${datadir}/fonts/X11, and ${datadir} is ${prefix}/share (or something, at least it references ${prefix}. So there's three indirections there. In configure.ac, we're using AC_DEFINE_DIR to expand FONTPATH and store the result in COMPILEDDEFAULTFONTPATH. Unfortunately, AC_DEFINE_DIR only evaluates the given variable twice, ie it resolves the ${FONTROOTDIR} and ${datadir} references, but it leaves ${prefix} unresolved. That means that you end up with include/xorg-config.h #define'ing COMPILEDFONTPATH to a string literal that references ${prefix}. COMPILEDFONTPATH is assigned to defaultFontPath in dix/globals.c and so you end up with that unexpanded string in the Xorg binary.
Mass closure: This bug has been untouched for more than six years, and is not obviously still valid. Please file a new report if you continue to experience issues with a current server.
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