ok i added the socket line for the project db, and the error changed:
"access denied for user ''@'localhost' to database 'demo__development'"
Betting its because rake still wont work:
steve@CM-Laptop:~/Desktop/test/demo$ rake db:create
(in /home/steve/Desktop/test/demo)
Couldn't create database for {"socket"=>"/opt/lampp/var/mysql/mysql.sock", "username"=>"lampp", "adapter"=>"mysql", "timeout"=>5000, "host"=>"localhost", "password"=>nil, "database"=>"demo__development"}, charset: utf8, collation: utf8_general_ci (if you set the charset manually, make sure you have a matching collation)
steve@CM-Laptop:~/Desktop/test/demo$