I seem to have figured out the problem...
it doesn't work in a loop a guess.
<% for post in @posts %>
<td><%=h post.body %></td>
<td><%= link_to_remote 'Show', :url => post, :update => 'div2'
<td><%= link_to 'Edit', edit_post_path(post) %></td>
<td><%= link_to 'Destroy', post, :confirm => 'Are you sure?',
:method => :delete %></td>
<% end %>
it won't work up there but it would work fine with 'New' link...
<%= link_to_remote 'New post', :url => new_post_path, :update => 'div2'