So, RadRails is a little more difficult to setup than simply adding the two plugins (RadRails itself and RDT, which is relies on) to your Eclipse install. You tried creating a new Rails project and it wasn't populated with files? Read on, gentle hacker.
You need to determine the correct full path to both your ruby interpreter AND to rails and rake utilities. We'll go over these steps here.
First, this relies on the fact that you have both Ruby and Rails installed and working from the console. If you're unsure of the path to any of these ececutables and/or .rb files, check the version #s using the -v option for both. This comes in handy mostly if you've got multiple instances of ruby/rails installed.
yourname$> ruby -v ruby 1.8.5 (2006-12-04 patchlevel 2) [powerpc-darwin8.8.0]
yourname$> rails -v Rails 1.2.2
Now that you know the specific version number, you can test this against the version number of binaries within specific directories.
On my PowerBook, the correct paths are:
Go to Eclipse Preferences→Ruby to set the Ruby path and Rails to set the others. As of right now I'm not using Mongrel so you can leave that blank.
Once these paths have been set, you should be able to create a new Rails project successfully!