Do you have the .sql files in the same directory that you're running mysql from?
Mind you mine's a Windows server, but when I first start a command prompt I'm at C:\Documents and Settings\User, etc. I have to change directory to my desktop (where I usually drop the .sql files in advance) before I start mysql (with mysql -u root -p).
If you don't have them in the directory you're running it from, then it may not be able to find them. As for what version of the database to use, that's up to you. If you're grabbing from CVS, there's a more recent version than 1118. (I believe it's up to 1118 B or C now).
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