I just ran an Update on my Snow Leopard and today when I tried to run Rails server I got the following:
Rails is not currently installed on this system. To get the latest
version, simply type:$ sudo gem install rails
On Echo $PATH I get following:
/opt/local/bin:/opt/local/sbin:/usr/bin:/bin:/usr/sbin:/sbin:/usr/local/bin:/usr/local/git/bin:/usr/X11/bin
Update
Running the command giving above for installing rails did not do any harm. I guess updating process removed previous links of rails. the latest version of Rails and dependencies got installed and things working perfect
Try this command
and see if rails is installed. If it is, add it to your executable path