Why is postgresql-libs-7.4.8-1.RHEL4.1 part of this distribution???
Maybe there's no good reason:
[root@test7 ~]# rpm -q --whatrequires postgresql-libs
no package requires postgresql-libs
[root@test7 ~]#
It really does impede trying to install a full PostgreSQL distribution from postgresql.org
It's your system, if you don't want postgresql-libs installed, then just remove it:
rpm -e postgresql-libs