The most probably reason is that the newest version of Rails is 2.0, this tutorial is written for 1.2. Outstanding tutorials are yet to come for 2.0 (AFAIK).
To play with version 1.2, do this from the command line (NOTE: uninstalls rails 2 and installs rails 1.2)
gem uninstall rails gem install rails -v 1.2.6
If it still doesn't work, or you want to play with 2.0 anyway: Run the server (script/server). After it starts, copy and paste what it prints out to the command line into this thread. That may tell us if there's an error with the booting process -- which is what I suspect.