Rails 1.2.3 and lighttpd not working together

I have a rails dev machine running freebsd 6.2. It has the latest ruby 1.8.6, rails 1.2.3, and lighttpd 1.4.16 When i create a new app, and start script/server I get the typical msg saying that its booting lighttpd and that Ctl+C will kill the server. However, when i try to access the webserver it doesn't respond. When I hit Ctrl+C it says "exiting" but then it just hangs there. Using 'top' i can see that there're 2 ruby processes that are pinning the cpu. They wont terminate so i have to kill -9 them. If i start script/server webrick, my app is online with no problems whatsoever.

I've already tried googling for solution, nothing I could find solved my problem.

Anybody knows fix this?

PS. I've previously used lighttpd with rails 1.1.x on freebsd 6.2 and never had a problem.