If building binaries in a directory separated from sudo source, then make target install-sudoers fails to install sudoers file. The target expects the sudoers file located in source tree (like in previous versions). Acually it has been created in the build tree.
Repeat with:
$ tar -xvzf sudo-1.7.4p3.tar.gz
$ mkdir build
$ cd build
$ ../sudo-1.7.4p3/configure
$ make
$ mkdir /tmp/root
$ make DESTDIR=/tmp/root install

The last few lines of "make install" are:

test -f =/tmp/root/etc/sudoers || \
    /bin/bash /devel/pkg/sudo/sudo-1.7.4p3/install-sh -c -O 0 -G 0 -M 0440 \
        /devel/pkg/sudo-1.7.4p3/sudoers /tmp/root/etc/sudoers
cp: cannot access /devel/pkg/sudo/sudo-1.7.4p3/sudoers
*** Error code 1
make: Fatal error: Command failed for target `install-sudoers'