After building an image with Luby (version 1.9.3), I tried to install rails, but it gave me an error because of unable to include some file or find some library. This is the same type of problem keep happening when I try to compile or install a new package in Galileo board (the part I don't like about this board).
So I did what rmm200 suggested to compile a new Luby tarball, then "gem install rails" works, even though it took me half day to compile and install everything.