That's reallyi bizarre!
When you reinstall from scratch, match sure you delete the old dircetory first. If your installation directory is corrupt somehow, you wouldn't want to install on top of that.
Also, you could try using Instant Rails (a prepackaged combo of Ruby, Rails, and MySQL) to see if that works:
Finally, you can post this to the ruby-talk mailing list to see if anyone else recognizes the problem:
If you post here, don't use Rails in the subject line (use WEBrick as you did here), because if you do, people will assume you're posting about a Rails problem and figure you should have posted to the Rails mailing list and so may not even read it.