Older versions of ExtUtils::AutoInstall had the following snippet of code

sub _can_write {
    my $path = shift;
    mkdir ($path, 0755) unless -e $path;

    require Config;
    return 1 if -w $path and -w $Config::Config{sitelib};

    print << ".";
*** You are not allowed to write to the directory '$path';
    the installation may fail due to insufficient permissions.
.
    # ...
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while newer versions just test for -w $path, i.e.

sub _can_write {
    my $path = shift;
    mkdir ($path, 0755) unless -e $path;

    return 1 if -w $path;
    
    # ...
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In other words, if $path isn't the problem, it could still be $Config::Config{sitelib}  (...something the error message doesn't say).

Now I'm not entirely sure, but I suspect Config.pm might not be taking into account that you've told your CPAN shell to install to some other local directory...

Anyhow, I would just try installing the current version of ExtUtils::AutoInstall into some local directory (and set PERL5LIB appropriately, or some such), and see if that works then. (If it doesn't - for some other reason - you could also copy the original (5.8.0) ExtUtils/AutoInstall.pm to some local directory, and edit the respective line to no longer test for Config{sitelib}.)