Jruby 1.3.0 + ARJdbc 0.9.1 + jtds 1.2.2 + MSSql 2005 - database.yml format ?

I have a standalone ruby script that demonstrates correct connection to my sqlserver database (jdbc.rb in pastie) that succeeds.

I have a Rails 2.3.2 app with this database.yml in pastie .

tds-1.2.2.jar is located in $RUBY_HOME/lib/ruby/1.8/java.  I have also tried unpacking the jar to the same location.

That location is included in $: for both irb and script/console and script/runner

This errors with (extended out in pastie)

The driver encountered an error: cannot load Java class net.sourceforge.jtds.jdbc.Driver