I ran into a problem installing Rails on XP and decided to do it manually. Luckily there’s support for this and it’s documented here. Simply download the listed gems and install in the recommended order. Scroll down to the “Manual Installation” section of the link above. You’ll need to download each gem and then run gem install gemname for each one. It’s a little extra work, but works flawlessly.
[...] I’ve been dealing with this insanely frustrating problem for a few weeks now. I do most of my Rails development on my Mac, but run instances on both Linux and Windows XP. XP has burned me until I won the battle this evening. I was able to install Rails through a manual process a while back. After getting Rails running on XP I struggled with the WEBrick server. The server would start and listen on port 3000, but when I made any request the browser would hang and so would the Ruby process. [...]