I've cross referenced various files under the config directory with a fully working rails 3 application that I have. Double checked the script directory, which only contains the rails script. I am really running out of ideas here. Any ideas would be greatly appreciated.
Can you show how you are referencing the style sheets?
To get to the stylesheets directory, you only need to do:
Which will render the file: Rails.root / public/stylesheets/mysheet.css