problem getting rails 3 to work

i can't seem to get rails 3 to work on my linux system, i have built ruby 1.9.2-p0 from source, and i have seeing some issues

1) when I type 'bundle install', i get the following error?

Could not locate Gemfile

2) rake is broken

i can't seem to get rake working with rails 3 using ruby 1.9.2, i get the following error when i type rake -v

yadav@vision:~$ rake -v /usr/local/lib/ruby/1.9.1/rubygems.rb:340:in `bin_path': can't find executable rake for rake-0.8.7 (Gem::Exception)   from /usr/local/bin/rake:19:in `<main>'

gems i have install are:

abstract (1.0.0) actionmailer (3.0.0) actionpack (3.0.0) activemodel (3.0.0) activerecord (3.0.0) activeresource (3.0.0) activesupport (3.0.0) arel (1.0.1) builder (2.1.2) bundler (1.0.0) calendar_date_select (1.16.1) erubis (2.6.6) grackle (0.1.10) gruff (0.3.6) i18n (0.4.1) json (1.4.6) mail (2.2.5) mechanize (1.0.0) mime-types (1.16) minitest (1.6.0) nokogiri (1.4.3.1) oauth (0.4.3) patron (0.4.8) polyglot (0.3.1) rack (1.2.1) rack-mount (0.6.13) rack-test (0.5.4) rails (3.0.0) railties (3.0.0) rake (0.8.7) rdoc (2.5.8) RedCloth (4.2.3) rmagick (2.13.1) sqlite3-ruby (1.3.1) thor (0.14.0) treetop (1.4.8) tzinfo (0.3.23)

for issue 1) i realize i didn't cd into my rails project folder before executing the command, that seem to be working fine, however still having issue with rake, reinstalling rake didn't fix the error i am seeing