Rails unrecoverable error

Im working on an app but have been plagued by an unrecoverable error

module ApplicationConfiguration
  require 'ostruct'
  require 'yaml'

  if File.exists?( File.join(Rails.root, 'config',
'application.yml') )
    file = File.join(Rails.root, 'config', 'application.yml')
    users_app_config = YAML.load_file file
  end

  #default_app_config = YAML.load_file(File.join(RAILS_ROOT, 'vendor',
'plugins', 'config', 'application.yml'))
  default_app_config = YAML.load_file(File.join(Rails.root, 'config',
'application.yml'))

  config_hash = (users_app_config||{}).reverse_merge!
(default_app_config)

  unless defined?(AppConfig)
    ::AppConfig = OpenStruct.new config_hash
  else
    orig_hash = AppConfig.marshal_dump
    merged_hash = config_hash.merge(orig_hash)

    AppConfig = OpenStruct.new merged_hash
  end
end

Results in

Booting Mongrel
=> Rails 2.3.5 application starting on http://0.0.0.0:3000
/Library/Ruby/Gems/1.8/gems/desert-0.5.3/lib/desert/rails/
dependencies.rb:15:in `load_missing_constant': Constant AppConfig from
app_config.rb not found (NameError)
  from /Library/Ruby/Gems/1.8/gems/activesupport-2.3.5/lib/
active_support/dependencies.rb:80:in
`const_missing_not_from_s3_library'
  from /Library/Ruby/Gems/1.8/gems/aws-s3-0.6.2/lib/aws/s3/
extensions.rb:206:in `const_missing'
  from /Library/Ruby/Gems/1.8/gems/activesupport-2.3.5/lib/
active_support/dependencies.rb:92:in `const_missing'
  from /Users/me/Desktop/codes/apache2/rubydocs/portal/config/
initializers/mce_options.rb:1
  from /Library/Ruby/Gems/1.8/gems/activesupport-2.3.5/lib/
active_support/dependencies.rb:145:in
`load_without_new_constant_marking'
  from /Library/Ruby/Gems/1.8/gems/activesupport-2.3.5/lib/
active_support/dependencies.rb:145:in `load_without_desert'
  from /Library/Ruby/Gems/1.8/gems/activesupport-2.3.5/lib/
active_support/dependencies.rb:521:in `new_constants_in'
  from /Library/Ruby/Gems/1.8/gems/activesupport-2.3.5/lib/
active_support/dependencies.rb:145:in `load_without_desert'
  from /Library/Ruby/Gems/1.8/gems/desert-0.5.3/lib/desert/ruby/
object.rb:18:in `load'
  from /Library/Ruby/Gems/1.8/gems/desert-0.5.3/lib/desert/ruby/
object.rb:32:in `__each_matching_file'
  from /Library/Ruby/Gems/1.8/gems/desert-0.5.3/lib/desert/ruby/
object.rb:17:in `load'
  from /Library/Ruby/Gems/1.8/gems/rails-2.3.5/lib/initializer.rb:
622:in `load_application_initializers'
  from /Library/Ruby/Gems/1.8/gems/rails-2.3.5/lib/initializer.rb:
621:in `each'
  from /Library/Ruby/Gems/1.8/gems/rails-2.3.5/lib/initializer.rb:
621:in `load_application_initializers'
  from /Library/Ruby/Gems/1.8/gems/rails-2.3.5/lib/initializer.rb:
176:in `process'
  from /Library/Ruby/Gems/1.8/gems/rails-2.3.5/lib/initializer.rb:
113:in `send'
  from /Library/Ruby/Gems/1.8/gems/rails-2.3.5/lib/initializer.rb:
113:in `run'
  from /Users/me/Desktop/codes/apache2/rubydocs/portal/config/
environment.rb:5
  from /Library/Ruby/Site/1.8/rubygems/custom_require.rb:31:in
`gem_original_require'
  from /Library/Ruby/Site/1.8/rubygems/custom_require.rb:31:in
`require'
  from /Library/Ruby/Gems/1.8/gems/activesupport-2.3.5/lib/
active_support/dependencies.rb:156:in `require'
  from /Library/Ruby/Gems/1.8/gems/activesupport-2.3.5/lib/
active_support/dependencies.rb:521:in `new_constants_in'
  from /Library/Ruby/Gems/1.8/gems/activesupport-2.3.5/lib/
active_support/dependencies.rb:156:in `require'
  from /Library/Ruby/Gems/1.8/gems/rails-2.3.5/lib/commands/server.rb:
84
  from /Library/Ruby/Site/1.8/rubygems/custom_require.rb:31:in
`gem_original_require'
  from /Library/Ruby/Site/1.8/rubygems/custom_require.rb:31:in
`require'
  from /Users/me/Desktop/codes/apache2/rubydocs/portal/script/server:3
  from -e:1:in `load'
  from -e:1

Process finished with exit code 1

Anyone any idea how I could fix this or any point in the right
direction?
It seems to have something to do with desert plugin, it also seems
app_config.rb is non existant

After long time I found out init.rb was a plugin specific file and
moved it to /config/initializers

I had to remove this part of the code to make it working:

#reload CE in development
config.after_initialize do
  if RAILS_ENV == 'development'
    ActiveSupport::Dependencies.load_once_paths =
ActiveSupport::Dependencies.load_once_paths.select {|path| (path =~ /
(community_engine)/).nil? }
  end
end

That part gave me an error , any idea how i could fix that? Im not
using a vendor plugin community_engine anymore would setting it to /
work?
Any suggestions on that code part?