As near as I've been able to determine, the problem comes about because the spec file for making the diff (patch) assumes that the version of the kernel it is differencing against will have patches (a ./patches subdirectory containing patch-kernel.sh). If, however, the patch file is being generated against a release kernel which has no patches, then there are no patches in that release version so the spec file instructions fail.
There also seemed to be a problem in certain flags being passed to the build instruction which confuse the patchmerge process (they get appended to a directory name which then is found not to exist). Here are changes I made to work around these problems. (Beware that I'm a total newbie to this so this might be the blind leading the blind...)
diff -r 0dbd374bce49 tools/thoratec/svn/trunk/code/display/linux/build/ltib/config/platform/imx/kernel-2.6.35.spec.in
--- a/tools/thoratec/svn/trunk/code/display/linux/build/ltib/config/platform/imx/kernel-2.6.35.spec.in Fri Feb 10 14:25:38 2012 -0800
+++ b/tools/thoratec/svn/trunk/code/display/linux/build/ltib/config/platform/imx/kernel-2.6.35.spec.in Mon Feb 13 14:46:15 2012 -0800
@@ -14,6 +14,7 @@
Source : %{pkg_name}-%{version}.tar.bz2
Source1 : %{pkg_name}-%{version}-%{release}.bz2
URL : http://www.kernel.org/
BuildRoot : %{_tmppath}/%{name}
Prefix : %{pfx}
@@ -26,8 +27,12 @@
if [ -z "$PKG_KERNEL_LEAVESRC" ] || [ ! -d "$KSRC_DIR" ]
then
-%setup -n %{buildsubdir} -a 1
+#%setup -n %{buildsubdir} -a 1
+%setup -n %{buildsubdir}
+if [ -e patches/patch-kernel.sh ]
+then
chmod 755 patches/patch-kernel.sh
./patches/patch-kernel.sh
fi
+fi