Today i understood what -no-remote argument to firefox app does, atleast its implications. So if you have two instances of firefox with two different versions and you want to use them both parallel, then you should be using -no-remote option in one of the them (usually the least used version of firefox). I did a mistake of using no-remote option on both version of firefox and ended up instances firing firefox from other application having problem in locating the firefox. So i used the following option in my primary firefox instance
/home/ashwinke/firefox/firefox -P "ashwin"
And the following in my secondary version of firefox:
/usr/bin/firefox -P "default" -no-remote
With this setting everything seems to work fine. This seems to solve the problem of
"Firefox is already running, but is not responding. To open a new window, you must first close the existing Firefox process, or restart your system"
This is my setting in my preferened application setting in rhel 5.4
System --> preferences --> more prefrences --> prefered application --> web browser is changed to "custom" --> command section is changed as "/home/ashwinke/firefox/firefox -new-tab %s".