I had two problems with IRB and the Console on Windows: a) Couldn’t type in certain characters (square brackets and others)
b) a too long line would f* up the command line
I solved it by turning off readline support (also turns off TAB completion – but oh well)
If you want readline support AND tab completion see Setting up the Interactive Ruby Shell (IRB) for non-english keyboards on Windows XP
To start IRB without readline type:irb --noreadline
In your console.rb you might want to replace the last line to:exec "#{irb} #{libs} --noreadline"
change the console.rb file in the rails directory, not in your project. assuming ruby in c:\ruby and rails version 1.0 it will be located at C:\ruby\lib\ruby\gems\1.8\gems\rails-1.0.0\lib\commands\console.rb