Here is how to set up version control for a Rails project using Subversion. I just spent 4 hours and maybe you can do it in 20 minutes with these instructions.
I assume your situation is: You are setting up version control on a new subdirectory on your computer. You will copy your entire rails project directory tree into the new subdirectory after you get subversion running. With subversion, you are always working on a COPY of your project subdirectory. Once under subversion, you only edit the copy. You are running Linux, like Ubuntu or Fedora You will store your repository on your local computer.
Here is the subversion online book:
Monkey see, monkey do example of simple svn setup for a single user keeping a repository of a single subdirectory development project called "weedy", showing use of "add *" to suck up stuff as it is created.
Get subversion using your package manager, like on Ubuntu: sudo apt-get install subversion; use rpm for Red Hat type distros
verify svn --version
These examples are for a project subdirectory called "weedy" change for your need. Be sure to create branches, tags and trunk.
username-$ mkdir /home/username/repository username~$ svnadmin create /home/username/repository username~$ mkdir weedy/branches username~$ mkdir weedy/tags username~$ mkdir weedy/trunk username~$ svn import /home/username/weedy