hi there,
First of all check, have you configured IIS to work with php ?
Are you running this on your local computer for testing purposes? I was doing it on my computer with same settings and had the same error. Here's how I fixed it:
1. Make sure that you do not need to login to access localhost .. that is if you type
http://localhost .. it shouldn't popup a login window. If it does then please login
2. Make sure that IUSR_machinename -- has R/W access to "sessiondata", "uploadtemp" folders in your php folder .. that is where you have installed PHP. Also make sure that IUSR_machinename has executable rights to php4ts.dll or php5ts.dll and php.exe
3. Make sure that IUSR_machinename has read and execuatble rights to the folder which stores your php scripts.
If you set these up, you should be ready to go. Let me know whatever turnsup for you.
Regards
Jitender