Unable to create Grails project in IDEA 7.0 build#7361

Hi all,
I tried creating a grails application in IDEA v. 7.0 but it fails each time telling that "Failed to create grails application withing this project" in an external error message box but shows no exception at grails console within IDEA.
I've configured grails and groovy homes accordingly and they work well. My grails version is 0.4.2 and groovy version is 1.0.
I am following the steps in: http://docs.codehaus.org/display/GRAILS/IDEA+Integration

Also should note that I installed JetGroovy plugin manually and put it in plugins folder of IDEA. It seems that it work but whenever I visit the Settings | Plugins perspective there is a yellog flag beside it. Since I am new to IDEA plugins I am not sure what does it mean.

I will be very grateful if you could point me the potential fix of this problem.

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