OK, I managed to find the problem with my installation. It appears to be even simpler then I thought. RedHat 8.0 has an option to install a database called Red Hat Database 2.1 when installing OS . "Red Hat Database is based on PostgreSQL" according to a RedHat 8.0 documentation. It is critical that this database is either not installed at all or uninstalled before installing openACS. If you neglect this you will run into all kinds of problems with PATHs. That is exactly what happen to me- my aolserver was calling wrong psql to load the data blocks. The problem was that in my nsd-postgres file, the path was leading aolserver first to psql belonging to Red Hat Database and never reaching Postgresql psql.
This thread was more that helpful in solving this issue:
https://openacs.org/forums/message-view?message_id=33433
