Dry prime rib??? HOW?!

I think it was the quality of the meat. Not enough marbling as Pierino and HalfPint have said. It's not a question of it "being" a prime rib, it's a question of the rating of the quality of meat. Should be Choice or Prime.
Anything inspected but not rated should not be used as you have no guarantee.

I would definitely try employing the Alton Brown method next time - though it does require some advance planning. You can look at the recipe for a standing rib roast here: http://www.foodnetwork.com/recipes/alton-brown/dry-aged-standing-rib-roast-with-sage-jus-recipe.html

His method is a bit involved because it is compensating for an oven that hasn't received proper cleaning, but basically the jist of it is this:

1. Blot all surface moisture from your rib roast, place on a sheet pan with a rack in your refrigerator and gently cover with cheesecloth or paper towels. Change the paper/cheesecloth once a day for 2-3 days, 3 days or more for a bigger roast. Alton prefers the humidity to be around 50-60% but that's a bit hard to maintain in some refrigerators. Anything 40% or above has worked for me.

2) Rub the entire roast with vegetable oil including bones, then season all with a generous amount of coarse kosher salt and freshly cracked black pepper. Place inside of a dutch oven, camp oven, or a cast iron roaster. If you use a ceramic vessel, you need to place it in the oven to preheat (to 250F) to prevent thermal shock. Place a probe thermometer in the center of the roast and set unit to alarm at ~118-120F internal temp. Place all in the oven, lower oven temp to 200F, and remove from oven when the internal temperature is reached.

3) Remove the top of the dutch oven or roaster, cover with aluminum foil, and let it rest until the internal temp reaches ~130F. In the meantime raise your oven temperature to ~480-500F. Roast at high temperature in the oven for 10-15 minutes or until you see the desired amount of browning. You can also remove the foil for the last 5 minutes and broil on low to achieve a crispy crust.

4) Let rest for 10-15 minutes on your cutting board before serving.

Basically, the trick to this is low and slow to cook the roast, and then blast it with high eat after resting to get the desired browning and crust on the meat at the end.

My first thought is, was it really "prime" rib? Rib roasts can be "choice" which doesn't have as much marbling of fat. If the meat is too lean it will definitely dry out with long cooking. And yes, you should check the internal temperature.

I think you should have started off with a hotter oven, 450 degrees. Roast needs to patted DRY before apply salt (or spices) are applied, and I only use salt and a lot of it. Bone side down in the pan, 450 for 15 minutes and then turn down the temperature to 325. DO NOT open the oven. A five pound roast should stay in for an additional 40 minutes and then start checking the temperature. Also, the roast should have sat out of the fridge for at least an hour before roasting. Internal temperature should be 120-125 for rare, medium rare 130-135, I wouldn't let it over that, or it could very well dry out. Let it sit at room temperature for about 20 minutes before carving. I'm sure others will have suggestions as well. This is just my method and it works every time. However, I do buy a larger roast 6-8 pounds with three ribs tied.

A couple of questions:
1. At what internal temp did you pull the roast out of the oven?
2. Did you let the roast rest for at least 20 minutes before you sliced into it?

BTW, what cut of meat was it?