Many thanks for your pull request! Support for Windows chronically lags behind Unix, and I'd love to hear about any more bugs you run into on Windows.
rlwrap is just a little program which provides some standard features of Unix shells like commandline history and keyboard shortcuts. It's nice to have but certainly not essential.
Just echoing that rlwrap isn't needed. I actually added an arg (-n) to arc.sh that doesn't use rlwrap. I use it when running arc inside an emacs shell, because emacs has terminal integration that I prefer.
I started using ansi-term in emacs to launch a shell file which wrapped rlwrap around the file I wished to execute. Turns out that M-x no longer works in that buffer.