Gemsonrails crapping out during installation

I get the following error on installation:

gem install gemsonrails Successfully installed gemsonrails-0.4.3 ERROR: While executing gem ... (Errno::ENOENT)     No such file or directory - getcwd

After it says it is installed via gem list --local but if I try to freeze a gem, I get the following:

rake gems:freeze GEM=activemerchant /Applications/Locomotive2/Bundles/standardRailsJan2007.locobundle/i386/ lib/ruby/gems/1.8/gems/rake-0.7.1/lib/rake.rb:1652:in `pwd': No such file or directory - getcwd (Errno::ENOENT)         from /Applications/Locomotive2/Bundles/ standardRailsJan2007.locobundle/i386/lib/ruby/gems/1.8/gems/rake-0.7.1/ lib/rake.rb:1652:in `initialize'         from /Applications/Locomotive2/Bundles/ standardRailsJan2007.locobundle/i386/lib/ruby/gems/1.8/gems/rake-0.7.1/ lib/rake.rb:248:in `new'         from /Applications/Locomotive2/Bundles/ standardRailsJan2007.locobundle/i386/lib/ruby/gems/1.8/gems/rake-0.7.1/ lib/rake.rb:248:in `application'         from /Applications/Locomotive2/Bundles/ standardRailsJan2007.locobundle/i386/lib/ruby/gems/1.8/gems/rake-0.7.1/ bin/rake:7         from /Applications/Locomotive2/Bundles/ standardRailsJan2007.locobundle/i386/bin/rake:16:in `load'         from /Applications/Locomotive2/Bundles/ standardRailsJan2007.locobundle/i386/bin/rake:16