1.0.2 works with 1.4.0 of Guard, but not 1.6.5 or others on 1.6. Any change to the file doesn't trigger the guard. However, if I hit Enter in Guard, the sass to css conversion works fine.
I'd love to help because guard-coffeescript has the same problem and I'd like to help fix. Any hints in the right direction would be great.
Could you post your Gemfile and Guardfile please.
So after testing the hell out of this it looks like it's just a basic incompatibility with Ruby 1.8.7. Easy fix - just move to 1.9.3 and everything works fine.
The guardfile and Gemfile were about as simple as they could be. Simply running the project in 1.9.3 fixed it.