Just covering all bases, but you did change "your_i-bay_name" to the actual i-bay name when you issued the command, Bernt?
Also, to check to see if your command actually updated the i-bay try issuing this command:
cat /home/e-smith/accounts |grep ibay
You will get a listing (singleline, wrapped) of the various ibay properties. Look for "PHPBaseDir" (between "Name" and "PasswordSet")and check the value following the next "|". It should be "/" if you have changed it correctly.
/Jens