Does the Grothendieck group of finitely generated modules form a commutative ring where the multiplication structure is induced from tensor product?

No. For instance, let $k$ be a field and let $R=k[x]/(x^2)$. Then every finitely generated $R$-module is a direct sum of copies of $R$ and $R/(x)$, and it is easy to see that $G(\mathrm{mod}R)$ is freely generated as an abelian group by $[R/(x)]$, with $[R]=2[R/(x)]$ (you can see this since there is a homomorphism $G(\mathrm{mod}R)\to\mathbb{Z}$ sending a module to its dimension as a $k$-vector space). But this group does not form a ring under the tensor product, since $R\otimes R\cong R$ and $R/(x)\otimes R/(x)\cong R/(x)$ so we would need to have both $[R]^2=[R]=2[R/(x)]$ and $[R]^2=(2[R/(x)])^2=4[R/(x)]$.

Suppose $R$ is a ring such that for every $R$-module $M$ there is a projective resolution $P_\bullet \to M$ of finite length (actually, this condition can be loosened quite a bit as I will note at the end). Then we can define a ring structure on $G(R)$ the Grothendieck group of finitely generated $R$-modules by defining the following product $$ [A] \cdot [B] = \sum_i (-1)^i \text{Tor}_i(A,B). $$ Note that if $P$ is a projective $R$-module, then $[A]\cdot[P] = [A \otimes P]$ since the $\text{Tor}_i(A,P)$ vanish for $i >0$.

The way to show this is a little painful. We need to show that

1. This product is independent of choice of resolution,
2. this product is well-defined,
3. this product is symmetric,
4. this product satisfies the ring axioms.

It is in my opinion easier to define this product as a map on $G(R)$ first, though tastes may vary. Fix a finitely generated $R$-module $M$ and let $$ - \cdot M : G(R) \to G(R),\; [A] \mapsto [A] \cdot M := \sum_i (-1)^i [\text{Tor}_i(A,M)]. $$

Then one can show that this map is independent of the choice of resolution by showing $\text{Tor}_i(-,M)$ is. The well-definedness of the map follows since for any short exact sequende $0 \to A \to B \to C \to 0$ we have a long exact sequence of Tor, which shows $[A] \cdot M - [B] \cdot M + [C] \cdot M = 0$. The symmetry follows from the symmetry of Tor, so $[A] \cdot B = [B] \cdot A$.

From this point it is therefore acceptable to write $[A] \cdot [B]$, and we can prove the ring axioms one by one. For this it is good to note that for an $R$-module $M$ with projective resolution $P_\bullet \to M$ we have $$ [M] \cdot [N] = \sum_i (-1)^i [\text{Tor}_i(M,N)] = \sum_i(-1)^i H_i(P_\bullet \otimes N) = \sum_i (-1)^i [P_i \otimes N]. $$

This computation involves the nontrivial lemma that in the Grothendieck group we have $\sum_i(-1)^i [C_i] = \sum_i (-1)^i [H_i(C_\bullet)]$ for any finite complex $C_\bullet$ in the category.

Then the ring axioms can easily be checked by using properties of the tensor product.

The requirement that every object in the category have a finite projective resolution is actually too strong. If every object has a finite resolution that is $F$-acyclic for a functor $F$ on the category, then it induces a derived morphism on Grothendieck groups. Actually, the resolution need not even be in the category itself. For example for categories of coherent sheaves we almost never have projective resolutions, but in some situations (details omitted on purpose) we may have locally free resolutions, which are $\text{Tor}_i(-, *)$ acyclic, so that we can define the product.

Take $R=\mathbb {Z/4}$, and assume $\otimes$ induces a distributive multiplication.

Then we have $\mathbb{Z/2} + \mathbb{Z/2}= \mathbb Z/4$ from the usual extension.

However, if you multiply by $\mathbb Z/2$, you get on the LHS $\mathbb Z/2 + \mathbb Z/2$ and on the RHS $\mathbb Z/2$, which would imply that $\mathbb Z/2 = 0$.

However, if you look at the map defined on finitely generated $\mathbb Z/4$-modules (which are therefore finite) by $f:X\mapsto \ln |X|$, then it extends linearly to $\bigoplus_{X} \mathbb Z \cdot[X]\to (\mathbb R, +)$ and whenever $0\to A\to B\to C\to 0$ is exact, we have $|B| = |C||A|$ so $f(A)-f(B)+f(C)=0$, therefore $f$ actually induces a map $G(\mathrm{mod}-R)\to (\mathbb{R},+)$ that sends $\mathbb Z/2$ to $\log 2 \neq 0$

Therefore $\otimes$ does not induce a distributive multiplication on $G(\mathrm{mod}-R)$ (actually if you look at it closely you don't even need to assume distributivity, because it would automatically follow)