Well, I don't know about the Hivelogic article. But once you have ruby and rubygems setup it should be all easyride.
try "gem list --local" to see what gems are installed.
Try uninstalling EVERYTHING. Then manually check that you have no traces of rails, or Active*ANYTHING installed.
Then do "gem install -y rails" which should bring you Rails + all the dependencies.
Your problem seems to be that your ActiveRecord is not installed as GEM but as a regular Ruby library.
it sits in /usr/local/lib/ruby/site_ruby/1.8/active_record/base.rb while it shoud be somewhere like /usr/local/lib/ruby/gems/1.8/gems/activerecord-1.14.4/lib/active_record/base.rb
this can happen if you manually compile it and do 'make install' equivalent. i.e. ruby install.rb or whatever. Don't do that! :-) Use gem.