nginx and rails configuration question

[Cathal]

I found the following post:
http://article.gmane.org/gmane.comp.web.nginx.english/2283 which is very similar
to what I am attempting. My problem is that my nginx can't resolve static files
prefixed with the path matched in the location directive. All static file
requests are then proxied to the rails app. which cannot resolve them either.
Can anybody provide some guidance?

regards,
C.