I'd use 0 gauge set track - straights, curves and turnouts available.
Stick the track onto your baseboard and then build up the road surface to level with the top of the tracks. This can be touching the outside of the track and leaving a groove on the inside to allow for the wheel flanges.
You could also check out one of the Railway Modelling mags as they frequently have descriptions of how things like this are done.
Hope that helps
vT