Hmm... James does all the packaging, so I'm not so sure about this one.
 Has anyone else had this problem?  Does anyone know whats wrong?  I
don't have any Windows computers anywhere near me, otherwise I'd dig in
and play around and try to figure out what the problem is.  I know
termios is a C extension, and that can be the source of the problem.  I
don't know anything about Windows XP and permissions but if you don't
have administrative access, that could be a problem.  In the mean time,
you can try installing highline via setup.rb.  Just download the zip
file from http://rubyforge.org/frs/download.php/4511/highline-0.6.0.zip
and type ruby setup.rb in the base directory.  This should work without
termios / rubygems.  I've emailed james and let him know about this, so
hopefully he'll post an answer soon.

Wish I wasn't so dumb with Windows, but it's been years since I
switched to Linux ;)