During Rails install - ERROR: Failed to build gem native extension.

Installed Ruby 1.8.6-26 Final Release....then tried to install Rails
and got error show below....
Any ideas ?

PS. Had issues with 1.8.6-27 with sql lite and simple app work so
went to this version which gave
        me another error.... Having no luck :<

C:\Ruby>gem install rails
Bulk updating Gem source index for: http://gems.rubyforge.org
Install required dependency rake? [Yn] Y
Install required dependency activesupport? [Yn] Y
Install required dependency activerecord? [Yn] Y
Install required dependency actionpack? [Yn] Y
Install required dependency rack? [Yn] Y
Install required dependency test-spec? [Yn] Y
Install required dependency camping? [Yn] Y
Install required dependency markaby? [Yn] Y
Install required dependency builder? [Yn] YV
Install required dependency metaid? [Yn] Y
Install required dependency fcgi? [Yn] Y
Building native extensions. This could take a while...
ERROR: While executing gem ... (Gem::Installer::ExtensionBuildError)
    ERROR: Failed to build gem native extension.

ruby extconf.rb install rails
checking for fcgiapp.h... no
checking for fastcgi/fcgiapp.h... no
*** extconf.rb failed ***
Could not create Makefile due to some reason, probably lack of
necessary libraries and/or headers. Check the mkmf.log file for more
details. You may need configuration options.

Provided configuration options:
        --with-opt-dir
        --without-opt-dir
        --with-opt-include
        --without-opt-include=${opt-dir}/include
        --with-opt-lib
        --without-opt-lib=${opt-dir}/lib
        --with-make-prog
        --srcdir=.
        --curdir
        --ruby=C:/Ruby/bin/ruby
        --with-fcgi-dir
        --without-fcgi-dir
        --with-fcgi-include
        --without-fcgi-include=${fcgi-dir}/include
        --with-fcgi-lib
        --without-fcgi-lib=${fcgi-dir}/lib

Gem files will remain installed in C:/Ruby/lib/ruby/gems/1.8/gems/
fcgi-0.8.7 for
inspection.
Results logged to C:/Ruby/lib/ruby/gems/1.8/gems/fcgi-0.8.7/ext/fcgi/
gem_make.ou
t

C:\Ruby>

You're not crazy. It's broken.
cured by:
gem update --system

These instructions work great:
http://wiki.rubyonrails.org/getting-started/installation/windows

Thanks to Matt Jones for the diagnosis.