rails version error - related to PATH?

Sounds like what I went through about a year or two ago. I had
installed Ruby with ports or something, then, later when a new
release was announced, I installed that by building from source.

Sorry, don't remember which one I did first, but I remember seeing
strange PATH issues every time I rebooted. I had to hunt down and
kill all the old executables (ruby, rake, gem, etc) that were being
added to my path and that seemed to clear it up.

Hope that helps.