Serial declaration issue

That looks proper to me. Are you sure you selected the proper mega board before you verified or uploaded the sketch?

From the Arduino reference:

Arduino Mega example:
// Arduino Mega using all four of its Serial ports
// (Serial, Serial1, Serial2, Serial3),
// with different baud rates:

void setup(){
Serial.begin(9600);
Serial1.begin(38400);
Serial2.begin(19200);
Serial3.begin(4800);

Serial.println("Hello Computer");
Serial1.println("Hello Serial 1");
Serial2.println("Hello Serial 2");
Serial3.println("Hello Serial 3");
}

void loop() {}

Lefty