This is probably unhelpful, but since you seem stuck..

uninstall your ruby and rails installation.

download this .exe install (ruby only, no instant rails)

http://rubyforge.org/frs/?group_id=167

(you may need to reboot here or logoff/logon to make sure PATH is 
updated)

then manually install rails

> gem install rails --include-dependencies

now see how long rails -v takes.