If migrate is True on your Fields then web2py will want to have the databases directory existing first as it tries to open databases/ sql.log first. If this directory doesn't exist then an exception is thrown.
web2py$ ls -FC applications/newapp/ ABOUT __init__.py controllers/ languages/ modules/ views/ LICENSE cache/ cron/ models/ static/ wizard.metadata web2py$ python web2py.py -S newapp -M web2py Enterprise Web Framework Created by Massimo Di Pierro, Copyright 2007-2011 Version 1.91.6 (2011-02-01 17:13:19) Database drivers available: SQLite3, pymysql, PostgreSQL Traceback (most recent call last): File "/Users/grutz/src/web2py/gluon/restricted.py", line 188, in restricted exec ccode in environment File "applications/newapp/models/db.py", line 80, in <module> auth.define_tables(migrate=settings.migrate) # creates all needed tables File "/Users/grutz/src/web2py/gluon/tools.py", line 1198, in define_tables format = '%(role)s (%(id)s)') File "/Users/grutz/src/web2py/gluon/dal.py", line 3490, in define_table polymodel=polymodel) File "/Users/grutz/src/web2py/gluon/dal.py", line 522, in create_table logfile = self.file_open(table._loggername, 'a') File "/Users/grutz/src/web2py/gluon/dal.py", line 359, in file_open fileobj = open(filename,mode) IOError: [Errno 2] No such file or directory: 'applications/newapp/ databases/sql.log' web2py$ mkdir applications/newapp/databases web2py$ python web2py.py -S newapp -M web2py Enterprise Web Framework Created by Massimo Di Pierro, Copyright 2007-2011 Version 1.91.6 (2011-02-01 17:13:19) Database drivers available: SQLite3, pymysql, PostgreSQL Python 2.6.4 (r264:75821M, Oct 27 2009, 19:48:32) Type "copyright", "credits" or "license" for more information. IPython 0.10.1 -- An enhanced Interactive Python. ? -> Introduction and overview of IPython's features. %quickref -> Quick reference. help -> Python's own help system. object? -> Details about 'object'. ?object also works, ?? prints more. In [1]: