if you have any google eggs in your system (like protobuf for example) and you are trying to start the google appengine sdk you will get a "could not find version file" error. this is mainly caused by coding outside python peps guidelines (more exactly, package namespaces) and some more bad coding style.
I reported this bug just after last year's christmas but I guess the appengine has so many bugs they are busy with something else more important :-P
I gave detailed infos on the appengine bugtracker. The patch that fixes the problem is also available here.
if the live appengine is written the same way ...
i wish you happy hacking.