Looking inside the official selenic repository, I think that for a recent web2py you need at least *mercurial version 1.9* (released on August 2011 - this is the first one with the scmutil module).
BTW, the latest available mercurial version is 2.3 and maybe you need web2py version 2.00 for supporting it (according to the web2py 2.00 release notes, but they talk about a non-existent mercurial version 2.6 ;-) Nico --
