In fact HOME variable usually present on windows system, try to run
set HOME
So if it present then CERBERUS_HOME would be constructed as HOME/.cerberus
Also I do not recommend you to set CERBERUS_HOME to C:\ruby\lib\ruby\gems\1.8\gems\cerberus-0.1.1 because when you reinstall gem (lets say to 0.2.0 that would be release in 2 weeks) your configuration files as well as fetched sources would be removed. I think it is not what you want.
So my recipe - only in case if HOME absent add CERBERUS_HOME variable. I would recoment something like this CERBERUS_HOME = C:/work/cerberus