At the old corporate job, I couldn't
gem install rails. It didn't work because our corporate PCs were sitting behind an ISA server. Instead, I had to download each gem (ActiveRecord, ActionPack, etc.) separately, and install each one not knowing the dependencies. It's a pain. I imagine that many of you who are working at Microsoft shops are experiencing the same or similar issues. As Obie points out, this is obviously a big hurdle for those people who are trying to experiment with or, more importantly, sell Rails into their day jobs.
The inability to do gem install was a big mental barrier to adoption in some Microsoft-heavy shops where I've tried to introduce Ruby and Rails. It was also a huge (and constantly recurring) pain for gem commands to fail when I was stuck at a large client with an ISA proxy/firewall. The biggest problem is that a lot of times, nobody at the client site will know anything about the ISA proxy and attempts to figure out why "my Ruby just doesn't work" will meet with confusion, if not outright hostility.
Now you can simply download and install the RubySSPI gem and check out the Readme.txt to learn how to make it all work. I don't have an environment in which to try this myself, but if you've had success with this, please share.
Update: A report from the front lines - it works!