The first thing I would do is try to get a response from the server 
without all the variables in your request string.  To begin with, you 
need a valid API key and a valid session key.  Then you can try 
something like this:

require 'net/http'

Net::HTTP.start("1234 / host.com:1200) do |http|
  req = 
Net::HTTP::Post.new("/users/John/contact_groups.xml?session_key=123456789")

  resp = http.request(req).body
  puts resp
end

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