I probably did something stupid to cause this, or I'm missing something obvious, but I don't really know.

I am trying to create the very first application in the book (hello), and the console is telling me " 'rails' is not recognized as an internal or external command"

Anybody have any idea what the problem is? Tried to find the answer myself but my google-fu is not strong enough. Thanks in advance.

If installing rails gems on Windows manually, you'll need to set your system path (My Computer -> Properties -> Advanced -> Environment Variables -> System variables) to include the rails gem executable. It can be found here:

<Your ruby install dir>\lib\ruby\gems\1.8\gems\bin\rails.bat

Then, restart your command line console. You should be able to type "rails hello" and generate a project.