gem installed but 'rails' commands don't work

Question

when I run any rails command like rails s I get the following error:

Could not find diff-lcs-1.1.2 in any of the sources Try running bundle install.

However, I already installed diff-lcs.

bundle show diff-lcs /opt/local/lib/ruby1.9/gems/1.9.1/gems/diff-lcs-1.1.2

I also see diff-lcs when I do a gem list command

My GEM_HOME is /opt/local/lib/ruby1.9/gems/1.9.1

For reference, here's the contents of my Gemfile:

source 'http://rubygems.org'

gem 'rails', '3.0.0'
gem 'sqlite3-ruby', '1.2.5', :require => 'sqlite3'

group :development do
  gem 'rspec-rails', '2.0.0'
end

group :test do
  gem 'rspec', '2.0.0'
  gem 'webrat', '0.7.1'
end

And the output of which rails is /usr/bin/rails

Answer 1

If you are using Rails 3, edit 'Gemfile' in the root of your rails app such that it contains

gem 'diff-lcs'

Then run 'bundle install' from the root of your rails app.

Answer 2

Type "gem env" on your terminal. Check the executable path. Verify that it's set correctly.