SQLite3 is easier to configure than other DBs in Rails 3 it come preinstalled in the db folder, there is 3 way you can accomplish the task:
1 The trick you can Drag&Drop the sql file to the Induction icon in the Mac OSX bar (lovelly).
Intuition should connect to the DB without even filling the other fields.
2 You can write by hand the full path to the SQLite3 file ( "file://localhost/user/youruser/Desktop/project/db/test.sqlite3" ) the host is localhost.
3 You can also Drag&Drop the file to the first field at the top, after you have written the Hostname that is localhost.
Note: After you press connect Induction can freeze without responding in that case probably the path is wrong
Note If the database is correct but completely empty on the top left corner of the app you will se the select with the db path but the screen will be the same of config, is kind of a bug.
Note database.yml in Rails should be similar to this one