laika ruby no such file to load -- initializer

Forgive me I am new to ruby. I am trying to install the laika website see http://sourceforge.net/apps/mediawiki/laika/index.php?title=Setting_Up_Dev_Environment-_Mac_OS_X

I have the following error

Bobs-iMac:nwe bob$sudo jruby -S rake db:migrate
(in /Applications/MAMP/htdocs/laika)
Missing the Rails 2.3.8 gem. Please `gem install -v=2.3.8 rails`, update your RAILS_GEM_VERSION setting in config/environment.rb for the Rails version you do have installed, or comment out RAILS_GEM_VERSION to use the latest version installed.

but if I check my rails version

Bobs-iMac:nwe bob$ rails -v
Rails 2.3.8

How can this be?

When I comment out the line in environment.rb as the message suggests I then get a different error message

rake aborted!
no such file to load -- initializer

What is going on?

Any help appreciated Thank you