I started Rails when it was 1.3. I followed the second edition of Agile web development with Rails. I was facing hard time finding how the things were happening. As I did not have any experience of web development this was more painful. I followed the book and created the depot application twice but I still did not get very much from this book.
I was having trouble understanding the Ruby code mainly. As said by "listrophy" on #rubyonrails
Using rails without knowing ruby is
like trying to write a menu at a
chinese restaurant with only an
english-chinese dictionary.
You should get yourself up and running with Ruby first only then you should dig into Rails. I highly recommend you the Ruby for Rails book by David Black but for Ruby only. Read part 2 and part 3 only from this book. The things about Rails in this book is crap IMNSHO. When you are done with Ruby from this book, carry on your journey with the Agile rails book.
When you are done with all this, you can check out The Rails Way, The Ruby Way, Pro ActiveRecord books.... The list goes on and on... :)
The depot application in the Agile book is a great example of a sample Rails application. However I suggest you to check out Open Source Rails for some more sample apps. Rails Guides also have some very good tutorials on rails. As said by everyone else Railscasts by Ryan Bates has some very high quality free rails screencasts.
FYI I have a little knowledge about HTML and very little about CSS. You can not learn these technologies by following some book. You will learn these with the experience and time. Although some books can give you a good start. But I do recommend you to learn Javascript-Ajax and stuff. For this purpose you should use libraries like Prototype or Jquery. I recommend Jquery as this is much more easier to learn and also more powerful.
HTH :)