Running Grails application.. fails

I ran my app with grails 1.2.1 which use to work fine but suddenly was complain about the the grails version not compatible with the mail 1.0 plugin and it required grails version 1.3 or above. So i installed grails 1.3.5 but now on startup i am getting the following error:

[4000] digester.Digester Parse Error at line 1 column -1: Undeclared prefix: "xsi:schemaLocation".
org.xml.sax.SAXParseException: Undeclared prefix: "xsi:schemaLocation".
at org.apache.crimson.parser.Parser2.error(Parser2.java:3013)
at org.apache.crimson.parser.Parser2.processName(Parser2.java:1581)
at org.apache.crimson.parser.Parser2.processAttributeNS(Parser2.java:1553)

Has anyone seen this before?

Thanks