I think I followed all the instructions between Getting Started with EC2 Rails Infrastructure and Chef 0.7.0 on EC2 Rails Infrastructure Notes
/usr/lib/ruby/1.8/net/http.rb:2097:in `error!': 401 "Authorization Required" (Net::HTTPServerException)
from /usr/lib/ruby/gems/1.8/gems/chef-0.7.0/lib/chef/rest.rb:232:in `run_request'
from /usr/lib/ruby/gems/1.8/gems/chef-0.7.0/lib/chef/rest.rb:95:in `post_rest'
from /usr/lib/ruby/gems/1.8/gems/chef-0.7.0/lib/chef/client.rb:227:in `authenticate'
from /usr/lib/ruby/gems/1.8/gems/chef-0.7.0/lib/chef/client.rb:74:in `run'
from /usr/lib/ruby/gems/1.8/gems/chef-0.7.0/lib/chef/application/client.rb:163:in `run_application'
from /usr/lib/ruby/gems/1.8/gems/chef-0.7.0/lib/chef/application/client.rb:161:in `loop'
from /usr/lib/ruby/gems/1.8/gems/chef-0.7.0/lib/chef/application/client.rb:161:in `run_application'
from /usr/lib/ruby/gems/1.8/gems/chef-0.7.0/lib/chef/application.rb:53:in `run'
from /usr/lib/ruby/gems/1.8/gems/chef-0.7.0/bin/chef-client:26
from /usr/bin/chef-client:19:in `load'
from /usr/bin/chef-client:19