Don't install Ruby with RhoStudio. I believe it installs Ruby as your "system" Ruby. Don't let Rhodes dictate what your system Ruby is! (I have not yet installed the new RhoStudio. I am still using the old one that is still an Eclipse plugin.)
Install it using RVM. This is the preferred method of installation anyway.
If you are on Windows, then you will need other advice, though, because RVM is not available on Windows.
Rhodes/RhoStudio uses Ruby as part of the build process. This is not the same Ruby which is used in Rhodes apps themselves, which is always 1.9.2-p290.
Rhodes build can work with any Ruby from 1.8 to 1.9.3. I currently use 1.9.3-p194.
If you are using RVM, though, this really is moot, because then you can just use RVM for Rails as well. There's no reason you can't use one version of Ruby for Rails and another (either RVM or system) Rhodes Build/RhoStudio.
RVM really is the way to go today for Ruby in any case. What if you have to run multiple Rails servers on the same physical or virtual box, and they require different Ruby versions?
I really think Motorola has done a disservice to developers by packaging RhoStudio the way they have. They've made it "easy" but at the same time inflexible. You really don't want to use it the way it comes "out of the box", because it's rather impractical. It really is a hindrance, as well, for RhoStudio to no longer be available as an Eclipse plugin. I have lots of other plugins I use with Eclipse, and it is a pain to have to install them in a separate Eclipse instance just for RhoStudio. RhoStudio should play better with others.
Sorry I am running on win 7, rvm is not recognized on ruby 1.9.3 windows. This really is a pain, if I need to connect to rails on another machine/environment it makes debugging a lot more challenging having to have flip between the 2 ! I just installed the rhostudio 18.104.22.168 version last weekend and I have only been using rhostudio for 2 months. Thanks for the info.