A lot has changed since the book was written. However, you can still use it to learn Rails. Here's what you need to do:
First, Instant Rails is and has been dead. Get rid of it. The preferred way to use Ruby and Rails on a Windows box is to use Rails Installer. (http://www.railsinstaller.org)
This should solve most of your problems with using Ruby on Windows.
If you want you can always add a version of Rails 2.x to your system after the fact if you want to work through the book. Otherwise if you find something that breaks just check the Rails docs to see what has changed from 2.0 to 3.0.