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I answered my own question. I need to set the NSHDIR environment variable.
Setting this as well as setting the LD_LIBRARY_PATH variable makes nsh work.
right - so if you look at the output of the installer it tells you that for a local install you need to set the NSHDIR and LD_LIBRARY_PATH=$NSHDIR/lib...
those are set by the init script in NSH/conf btw so when you use that to startup the appserver they are set correctly. if you are going to be using this system a lot you may want to set these in your user's .profile.
also - why did you choose to do a 'local' install ?