Rallying

I've never gotten this to work.

Does the general have to be positioned BEHIND the fleeing troops or something?

At first I thought that this was because my general had died, but no.

I've played Medieval from one end of the board to the other maybe 20 times, but to date every time I attempt to select "rally" for some fleeing troops, it invariably says "current selection cannot rally," or it's otherwise greyed out.

Something I'm doing?

It totally depends on our situation, how many men you have left, what direction they are running in and the most important how close is the enemy. If a unit of Vikings are running after your Irish "pea" (lol) shooters then they wont rally, even if you click it. Their valur also plays a big part. I usually wait to call for a rally even if I can click it till, they are running in the right dirction (fleeing from an enemy, they will scatter) have enough men, like over 10 and their valur isnt 0. I'll try to have my gen. be near them but I don't really know if that helps.

In my experience the Rally command does work, but not every time. It almost never works for low morale units, like peasants or lower value spearmen. It does usually work for higher morale units, and for disciplined units it almost always works.

I think it depends on other factors too - how many other units are routing or rallying, is your general still alive and on the battlefield, are there enemy units on the flanks or in pursuit, how tired the unit is, etc, etc...

When you rally, try to reform your units into some sort of formation before you reengage the enemy, they will get a morale bonus for flank protection that will help prevent them all routing again. I usually send all rallied troops to a point (say a hill top) and gradually form a new defensive position. It wont always work though, enemy units may just rout you off the map. But sometimes I have won a 'lost' battle using this method.

According to Puzz3D, the man who knows such things, the rally command applies +8 to the unit you are trying to reform. Presumably if this doesn't get the unit morale above the -7 rout threshold the unit will not rally. There are of course plenty of negative influences to force morale way down once things start going badly.