I know that this is old, but wanted to give a clear answer.
This means that your app has been packaged with the local directory and now your setup.xml is trying to overwrite existing configurations. I recommend removing the local directory from the app (or ignoring it when packaging with tar) then reinstalling (including removing the old copy of the app).
Then when you go to setup the app a new local directory will be created and local configurations will be written there.
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