Error :

Rails requires RubyGems >= 1.3.1 (you have 1.2.0). Please `gem update –system` and try again .

Fix :

As it is clear from the error message, updating the RubyGems will resolve this issue.
Reinstall the ruby gems using the following commands:

gem install rubygems-update
update_rubygems

Error :

boot.rb:20:Warning: Gem::SourceIndex#search support for String
patterns is deprecated

Fix :

There is a call to Gem Source Index in  boot.rb:

‘Gem.cache.search’

Just replace ‘search’ with ‘find_name’ .

It should look something like this :

rails_gem = Gem.cache.find_name(`rails’,”=#{rails_gem_version}.0″).sort_by { |g| g.version.version}.last

Error :

/usr/local/lib/ruby/site_ruby/1.8/rubygems/custom_require.rb:31:in `gem_original_require’: no such file to load — zlib (LoadError)

Fix :

Ruby-zlib should be built into Ruby 1.8
Build ruby-zlib manually.

wget http://www.blue.sky.or.jp/atelier/ruby/ruby-zlib-0.6.0.tar.gz
tar xvzf ruby-zlib-0.6.0.tar.gz
cd ruby-zlib-0.6.0
ruby extconf.rb
make
make install

Now, reinstall Ruby Gems from source.