Trouble starting the server, HELP PLEASE!

can anybody tell me what is going wrong from the information taken
from the development log below. WHen i start WEBrick and try and view
a page on the localhost i get the following error, "We're sorry, but
something went wrong.We've been notified about this issue and we'll
take a look at it shortly."
I'm a complete beginner and really want to start learning Ruby on
rails, but cannot at the moment get past the setup phase despite a
long time trying and i feel I'm almost there. Hope someone can help.

# Logfile created on Wed Mar 24 17:13:17 +0000 2010/!\ FAILSAFE /!\
Wed Mar 24 17:13:27 +0000 2010
  Status: 500 Internal Server Error
  uninitialized constant Encoding
    /usr/local/lib/ruby/gems/1.8/gems/activesupport-2.3.5/lib/
active_support/dependencies.rb:443:in `load_missing_constant'
    /usr/local/lib/ruby/gems/1.8/gems/activesupport-2.3.5/lib/
active_support/dependencies.rb:80:in `const_missing'
    /usr/local/lib/ruby/gems/1.8/gems/activesupport-2.3.5/lib/
active_support/dependencies.rb:92:in `const_missing'
    /usr/local/lib/ruby/gems/1.8/gems/sqlite3-0.0.8/lib/sqlite3/
encoding.rb:9:in `find'
    /usr/local/lib/ruby/gems/1.8/gems/sqlite3-0.0.8/lib/sqlite3/
database.rb:66:in `initialize'
    /usr/local/lib/ruby/gems/1.8/gems/activerecord-2.3.5/lib/
active_record/connection_adapters/sqlite3_adapter.rb:13:in `new'
    /usr/local/lib/ruby/gems/1.8/gems/activerecord-2.3.5/lib/
active_record/connection_adapters/sqlite3_adapter.rb:13:in
`sqlite3_connection'
    /usr/local/lib/ruby/gems/1.8/gems/activerecord-2.3.5/lib/
active_record/connection_adapters/abstract/connection_pool.rb:223:in
`send'
    /usr/local/lib/ruby/gems/1.8/gems/activerecord-2.3.5/lib/
active_record/connection_adapters/abstract/connection_pool.rb:223:in
`new_connection'
    /usr/local/lib/ruby/gems/1.8/gems/activerecord-2.3.5/lib/
active_record/connection_adapters/abstract/connection_pool.rb:245:in
`checkout_new_connection'
    /usr/local/lib/ruby/gems/1.8/gems/activerecord-2.3.5/lib/
active_record/connection_adapters/abstract/connection_pool.rb:188:in
`checkout'
    /usr/local/lib/ruby/gems/1.8/gems/activerecord-2.3.5/lib/
active_record/connection_adapters/abstract/connection_pool.rb:184:in
`loop'
    /usr/local/lib/ruby/gems/1.8/gems/activerecord-2.3.5/lib/
active_record/connection_adapters/abstract/connection_pool.rb:184:in
`checkout'
    /usr/local/lib/ruby/1.8/monitor.rb:242:in `synchronize'
    /usr/local/lib/ruby/gems/1.8/gems/activerecord-2.3.5/lib/
active_record/connection_adapters/abstract/connection_pool.rb:183:in
`checkout'
    /usr/local/lib/ruby/gems/1.8/gems/activerecord-2.3.5/lib/
active_record/connection_adapters/abstract/connection_pool.rb:98:in
`connection'
    /usr/local/lib/ruby/gems/1.8/gems/activerecord-2.3.5/lib/
active_record/connection_adapters/abstract/connection_pool.rb:326:in
`retrieve_connection'
    /usr/local/lib/ruby/gems/1.8/gems/activerecord-2.3.5/lib/
active_record/connection_adapters/abstract/connection_specification.rb:
123:in `retrieve_connection'
    /usr/local/lib/ruby/gems/1.8/gems/activerecord-2.3.5/lib/
active_record/connection_adapters/abstract/connection_specification.rb:
115:in `connection'
    /usr/local/lib/ruby/gems/1.8/gems/activerecord-2.3.5/lib/
active_record/query_cache.rb:9:in `cache'
    /usr/local/lib/ruby/gems/1.8/gems/activerecord-2.3.5/lib/
active_record/query_cache.rb:28:in `call'
    /usr/local/lib/ruby/gems/1.8/gems/activerecord-2.3.5/lib/
active_record/connection_adapters/abstract/connection_pool.rb:361:in
`call'
    /usr/local/lib/ruby/gems/1.8/gems/actionpack-2.3.5/lib/
action_controller/string_coercion.rb:25:in `call'
    /Users/peterorpete/.gem/ruby/1.8/gems/rack-1.0.1/lib/rack/head.rb:
9:in `call'
    /Users/peterorpete/.gem/ruby/1.8/gems/rack-1.0.1/lib/rack/
methodoverride.rb:24:in `call'
    /usr/local/lib/ruby/gems/1.8/gems/actionpack-2.3.5/lib/
action_controller/params_parser.rb:15:in `call'
    /usr/local/lib/ruby/gems/1.8/gems/actionpack-2.3.5/lib/
action_controller/session/cookie_store.rb:93:in `call'
    /usr/local/lib/ruby/gems/1.8/gems/actionpack-2.3.5/lib/
action_controller/failsafe.rb:26:in `call'
    /Users/peterorpete/.gem/ruby/1.8/gems/rack-1.0.1/lib/rack/lock.rb:
11:in `call'
    /Users/peterorpete/.gem/ruby/1.8/gems/rack-1.0.1/lib/rack/lock.rb:
11:in `synchronize'
    /Users/peterorpete/.gem/ruby/1.8/gems/rack-1.0.1/lib/rack/lock.rb:
11:in `call'
    /usr/local/lib/ruby/gems/1.8/gems/actionpack-2.3.5/lib/
action_controller/dispatcher.rb:114:in `call'
    /usr/local/lib/ruby/gems/1.8/gems/actionpack-2.3.5/lib/
action_controller/reloader.rb:34:in `run'
    /usr/local/lib/ruby/gems/1.8/gems/actionpack-2.3.5/lib/
action_controller/dispatcher.rb:108:in `call'
    /usr/local/lib/ruby/gems/1.8/gems/rails-2.3.5/lib/rails/rack/
static.rb:31:in `call'
    /Users/peterorpete/.gem/ruby/1.8/gems/rack-1.0.1/lib/rack/
urlmap.rb:46:in `call'
    /Users/peterorpete/.gem/ruby/1.8/gems/rack-1.0.1/lib/rack/
urlmap.rb:40:in `each'
    /Users/peterorpete/.gem/ruby/1.8/gems/rack-1.0.1/lib/rack/
urlmap.rb:40:in `call'
    /usr/local/lib/ruby/gems/1.8/gems/rails-2.3.5/lib/rails/rack/
log_tailer.rb:17:in `call'
    /Users/peterorpete/.gem/ruby/1.8/gems/rack-1.0.1/lib/rack/
content_length.rb:13:in `call'
    /Users/peterorpete/.gem/ruby/1.8/gems/rack-1.0.1/lib/rack/handler/
webrick.rb:50:in `service'
    /usr/local/lib/ruby/1.8/webrick/httpserver.rb:104:in `service'
    /usr/local/lib/ruby/1.8/webrick/httpserver.rb:65:in `run'
    /usr/local/lib/ruby/1.8/webrick/server.rb:173:in `start_thread'
    /usr/local/lib/ruby/1.8/webrick/server.rb:162:in `start'
    /usr/local/lib/ruby/1.8/webrick/server.rb:162:in `start_thread'
    /usr/local/lib/ruby/1.8/webrick/server.rb:95:in `start'
    /usr/local/lib/ruby/1.8/webrick/server.rb:92:in `each'
    /usr/local/lib/ruby/1.8/webrick/server.rb:92:in `start'
    /usr/local/lib/ruby/1.8/webrick/server.rb:23:in `start'
    /usr/local/lib/ruby/1.8/webrick/server.rb:82:in `start'
    /Users/peterorpete/.gem/ruby/1.8/gems/rack-1.0.1/lib/rack/handler/
webrick.rb:14:in `run'
    /usr/local/lib/ruby/gems/1.8/gems/rails-2.3.5/lib/commands/
server.rb:111
    /usr/local/lib/ruby/site_ruby/1.8/rubygems/custom_require.rb:31:in
`gem_original_require'
    /usr/local/lib/ruby/site_ruby/1.8/rubygems/custom_require.rb:31:in
`require'
    script/server:3

dont worry about this, i just stopped trying to have a version of ruby
in my local folder and everything seems to work fine now