error upgrading InstantRails on WinXP, 'could not find rails gem locally or in a repository'

I'm trying to upgrade to the latest version of rails. I've been happily using InstantRails2-0 for awhile and it's been great. However, I've hit problems trying to upgrade. I get the error in the subject when I do 'gem install rails'.

I've read the Rails Wiki about upgrading rails and it doesn't have any info on this error. The Rails Wiki said I needed to first do update_rubygems, and it appears I was able to do that successfully. My ruby version is 1.8.6. I googled this particular error and got a few hits about making sure the gem sources included gems.rubyonrails.org, which mine does.

I also found an article that suggested I download the latest rails from github, which I also tried.

Turns out the gem update didn't work, after I checked my gem version and found it was 1.2. When I do 'gem install rubygems-update', I get the same error:

'could not find gem rubygems-update locally or in a repository'

What am I doing wrong?

May be: gem update system?