BUG #4978: "too many private dirs demanded" error during postgres startup

The following bug has been logged online:

Bug reference: 4978
Logged by: Jinson Abraham
Email address: abraham(dot)jinson(at)gmail(dot)com
PostgreSQL version: 8.3.7
Operating system: Linux (RHEL 5.3)
Description: "too many private dirs demanded" error during postgres
startup
Details:

I am trying to start postgres 8.3.7 service on RHEL 5.3 but am seeing the
following error in the pgstartup.log file under /var/lib/pgsql

FATAL: too many private dirs demanded
FATAL: too many private dirs demanded
FATAL: too many private dirs demanded
FATAL: too many private dirs demanded
FATAL: too many private dirs demanded
FATAL: too many private dirs demanded

What i have done different after installing postgres is:

1. removed the service "chkconfig --remove postgresql"
2. added the service "chkconfig --add postgres"
3. "chkconfig postgresql on"

additionally when i do "service postgresql status" it gives the following
message:

"dead but pid file exists"

I don't recall doing anything else differently.