InstantRails 2.0 is from 2007 and is thus sorely outdated.
It still is weird how there remain a lot of users that keep starting with that.
I would always recommend doing the following:
use the latest version from Rubyinstaller.org (now they are 1.8.7p302)
there is no need to install the rubygems package seperately, it is included in the rubyinstaller (so also in the one you used). You can just run the executable and the commands ruby -v and gem -v should work. You might want to do a gem update --system to be safe.
also install the devkit! it allows you to install gems that need to compile binary code (like thin).
install a common set of windows gems for your pleasure. I have a batch-file written up in this post.
install git
install an editor of your choice (Netbeans which is free, or use Rubymine which is awesome!)
Have fun! :)
[UPDATE February 2014]
I helped at a RailsGirls meet, and there we got the girls started up in no time using the RailsInstaller (and it is available for Windows and Mac OSX). While I personally prefer to do it manually, this is a great alternative to get you started.
