=) Definitely develop on linux. What has been working perfectly for me
is using Eclipse and/or RadRails on my Windows box, but store the
project on my linux box and access it over a samba share. The only
drawbacks to this are some permissions issues that occasionally come up
and are easily fixed and that you can’t run any of the commands from
within your IDE. But how often do you use those anyway? You can just
execute them in a shell.
Also, check permissions on dispatch.fcgi if you haven’t already.
That shebang line error has gotten me several times before I went to my
current setup. Also, it doesn’t really tell you what is going on.