diff --git a/VERSION b/VERSION
index 17578627..e8d56c57 100644
--- a/VERSION
+++ b/VERSION
@@ -1 +1 @@
-Version 2.00.0 (2012-07-18 18:46:40) dev
+Version 2.00.0 (2012-07-18 21:46:56) dev
diff --git a/gluon/main.py b/gluon/main.py
index 806411a5..cff04b3c 100644
--- a/gluon/main.py
+++ b/gluon/main.py
@@ -106,10 +106,7 @@ try:
     version_info.close()
     global_settings.web2py_version = parse_version(raw_version_string)
 except:
-    # when VERSION file is not found,
-    # when VERSION file is empty,
-    # when VERSION file is incorrect:
-    global_settings.web2py_version = parse_version()
+    raise RuntimeError, "Cannot determine web2py version"
 
 web2py_version = global_settings.web2py_version
 
diff --git a/gluon/settings.py b/gluon/settings.py
index 18cf66f1..e926fbe9 100644
--- a/gluon/settings.py
+++ b/gluon/settings.py
@@ -18,7 +18,7 @@ if not hasattr(os, 'mkdir'):
 if global_settings.db_sessions is not True:
     global_settings.db_sessions = set()
 
-global_settings.gluon_parent = os.environ.get('web2py_path', __file__.partition("gluon")[0])
+global_settings.gluon_parent = os.environ.get('web2py_path', os.getcwd())
 
 global_settings.applications_parent = global_settings.gluon_parent