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