if gem update –system not works and rename ruby/bin/zlib1.dll to zlib.dll not helps try:
Open file RUBY_DIRlibrubysite_ruby1.8rubygems.rb
And replace existed def self.gunzip(data) by this:
def self.gunzip(data)
require ‘stringio’
require ‘zlib’
data = StringIO.new data# Zlib::GzipReader.new(data).read
data.read(10) # skip the gzip header
zis = Zlib::Inflate.new(-Zlib::MAX_WBITS)
is = StringIO.new(zis.inflate(data.read))
end