Background info:
I\'m using GIT to get a repository of a project with Ruby files in it. The project lives in my SITES folder under home directory on my Mac.
You're running rails server from the wrong directory. Go INTO the directory containing your app and run the command from there. For example, if you ran rails new thingy, you must be in the thingy directory when you use rails server.
rails server
rails new thingy
thingy