The original instructions for using the plugin were on my old site, but the gist is that you (may) need SnapOpen and need to enable the default File Browser plugin. Once you enable the File in Files plugin a 3rd tab will appear at the bottom of the screen. Typing in any search results there will display any matching files under your File Browser root with matching results. Basically a glorified grep -R
Update [11-20-2009]: New version released which supports Ack.
At some point I may get ambitious and add the ability to exclude log files, but for the moment I'd suggest only searching within a modest scope. i.e. searching within your Rails App folder? Ok! Searching within your Rails Root folder? Not such a great idea because of the potentially large log files and also all the plugins you may have. You can try it but you've been warned..
Again, I welcome any contributions or forks, so please have at it. Gedit plugins are written in Python or C and I don't program either particularly well.