This message about "command not found" is in local or remote(when you
executes capistrano)?
Mongrel should be installed in the server.
Another thing the command is mongrel_rails and you're trying to use
mongrel.
If don't works check where's the command (which mongrel_rails) and add
the path to PATH or include it in run command.
Anyway, you can check dependencies with capistrano:
|depend :remote, :gem, "mongrel"|
Regards
--
Rafa