Here is the output:

kpsewhich --expand-var='$TEXMF'
{/home/ben/.texlive2008/texmf-config,/home/ben/.texlive2008/texmf-var,/home/ben/texmf,!!/usr/local/texlive/2008/texmf-config,!!/usr/local/texlive/2008/texmf-var,!!/usr/local/texlive/2008/texmf,!!/usr/local/texlive/2008/../texmf-local,!!/usr/local/texlive/2008/texmf-dist}

and

kpsewhere context.tex
/usr/local/texlive/2008/../texmf-local/tex/context/base/context.tex
/usr/local/texlive/2008/texmf-dist/tex/context/base/context.tex

but it seems that it's just OK.

The problem seems to be the order in which TeX searches and uses the
various TEXMF trees. Can you post the output of

kpsewhich --expand-var='$TEXMF'

and of

kpsewhere context.tex

Thomas
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