problems running an older (1.1.6) rails app under 2.0.2

I've been trying to get my old rails app (environment.rb tells me it was
1.1.6) working under 2.0.2 and I've been having a hell of a time. Trying
to start up webrick nets me this:

kyle@sublime-porte:~/code/Ruby/midnet$ rails script/server
      create
File exists - /home/kyle/code/Ruby/midnet/script/server
ln: accessing `/home/kyle/code/Ruby/midnet/script/server/vendor/': Not a
directory
ln: accessing `/home/kyle/code/Ruby/midnet/script/server/vendor/rails':
Not a directory
ln: accessing `/home/kyle/code/Ruby/midnet/script/server/doc/api': Not a
directory

This never happened before. I don't know why it's looking in the
(non-existent) vendor folder for the rails files, when I've got rails
already installed in the correct place. I gathered that by 'freezing' my
rails app I force it to look locally for the files it needs- but I never
froze anything. This happens for script/about, script/console, and the
rest. I've made no changes at all to the code since it last worked a few
months ago.

I've been trying to get my old rails app (environment.rb tells me it
was
1.1.6) working under 2.0.2 and I've been having a hell of a time.
Trying
to start up webrick nets me this:

kyle@sublime-porte:~/code/Ruby/midnet$ rails script/server
     create
File exists - /home/kyle/code/Ruby/midnet/script/server
ln: accessing `/home/kyle/code/Ruby/midnet/script/server/vendor/':
Not a
directory
ln: accessing `/home/kyle/code/Ruby/midnet/script/server/vendor/
rails':
Not a directory
ln: accessing `/home/kyle/code/Ruby/midnet/script/server/doc/api':
Not a
directory

This never happened before. I don't know why it's looking in the
(non-existent) vendor folder for the rails files, when I've got rails

It can't hurt for the vendor directory to exist (as long as it doesn't
contain a rails folder in it)

Fred