Oh, boy. I've gotten our rails dev environment set up on a dozen different machines now and there's always a little problem here or there. One thing I can say right off the bat: I could never get it fully up and running on Windows, unfortunately.
But we have had success on both OS X and Linux machines.
The trick is to 1) install rbenv or rvm, 2) build the right version of ruby, 3) install the right gems, 4) make sure your PATH is set up properly.
The rails consultancy thoughtbot has a script you can run to just magically set up a new laptop for rails development. I don't do this (too magical, and too little control), but I usually pull up the script[1] just to remind myself of what things I need to attend to and install.
Feel free to hit me up at my email address in my profile if you're stumped on something. I've probably seen most issues by now...
[1] https://raw.github.com/thoughtbot/laptop/master/linux