I am not sure...your not working example looks exactly like what I have (I am using Struts 1.1). Do you see any errors at startup? I suspect that the problem is with an error in your validator-rules.xml file, or that the file does not exist in the specified directory.
Also, w.r.t. the validator-rules.xml not being used, can you create a folder under WEB-INF (say 'config') and put both validation.xml & validator-rules.xml there? And then update your struts-config.xml like below -
Please verify if your server contains the appropriate xml file... [ November 12, 2007: Message edited by: Bhaskar Reddy ]