Derives from the British term 'to Shag', which became popular within the USA due to the film 'Austin Powers'. Rag is used only in the conditional and past tense, or used as an expletive.
For the conditional, Rag would be used to infer that you would have the pleasure of being intimate with the object/person. It most frequently appears in the cliché, 'I'd rag her/him anyday!'
While on the other hand, in the Past tense, it is only used in a joking fashion. Using 'ragged' to tell the truth would only make people unable to take you seriously.
As an expletive, it is used as 'Raggy', which one shouts aloud to the unsupspecting public, to see if anyone noticing. Unofficially, it means 'I want to have sex with your right here right now.'
Anthony: I would so rag Mrs. Coe!
Ross: What were you doing around around Connor's house yesterday, Richard?
Richard: Ragging his bedsheet! What do you think?
Ross: Mate, you just shouted that out the window to small French Children.
Evolved from "on the rag" meaning having one's period, to "rag" meaning a woman who is having her period, to "rag" just meaning any woman in general.
DISCLAIMER: Women tend to find this term a bit offensive. Calling a woman this may slightly decrease your chances of getting laid.
Girl: (smacks him, pours beer on him, and leaves)
girl 2: She's on the rag.