ruby: No such file or directory -- rails (LoadError)

Hi,
I’m running Windows XP SP2 with Java 1.6.0 an am getting the above mentioned error message when I try and run rails, to create a project, from the command prompt:

c:>rails project_name

I have placed c:\pgRails\bin directory in my system environment path. Can anyone tell me what I may be overlooking here?

what version of ruby are you running? ruby -version

what version of rails -> gem list
look for the rails gem. which version do you have installed?

Hi Ivor,
please see my responses below:

what version of ruby are you running? ruby -version

1.8.5 (2006-12-25 patchlevel 12)

what version of rails -> gem list

1.2.2

look for the rails gem. which version do you have installed?

How do I go about finding this?