Be sure to unzip all of the files using the original directory structure.
The Rails project is dependent on several subfolders.

The Rails project has dependencies on a number of bitmap files produced by
the Graphics.exe subproject. Before you can build Rails.exe the first time,
you will need to go into the Graphics\bin\Debug folder and run Graphics.exe.
This will create a number of .bmp files in the Graphics\bin\Debug folder.
Once these have been created you can successfully build the Rails project.