I'm having the same problem with a fresh install of Redmine 0.8.0. All paths that are not Rails routes are broken. Even if I create a public/index.html file it isn't rendered. Of course there's no access to attachments either, as they're stored in public/files .
Before that, I had Redmine 0.7.3 running without problems, but now it broke because Dreamhost removed Rails 2.0.2. At first I couldn't freeze that old Rails version into it, so I ended up downloading Redmine 0.8.0.
I finally got 0.7.3 working again following these instructions in dreamhoststatus blog comments: http://www.dreamhoststatus.com/2009/01/05/hooray-another-rails-upgrade/comment-page-1/#comment-229398 -- there's one typo in step 1: "rb" should be "rm"
But it would still be nice to have 0.8.0.
Got 0.8.0 to work by deleting public/.htaccess . Strange, I thought Passenger already disables custom rewrites.