Not sure if you have tried this, but once you have Q2 resolved and can execute PHP files create one with the following code and view it in your browser.
You can then see if it contradicts what your GUI said.
Once you have installed apache put the .php files into the apache > htdocs directory.
Then open your browser and head to http://localhost/myfile.php and you should see the PHP rendered page.
Before this will work though you need to tell apache to have PHP handle .php files.
In your httpd.conf file (Apache > conf) add something like this to the bottom (changing the path to suit your setup):
For more comprehensive setup instructions though Kevin Yanks article here on sitepoint about Building your own DB driven website with PHP and MySQL is well worth the read.
LoadModule php5_module "c:/server/php5/php5apache.dll"
AddType application/x-httpd-php .php
AddType application/x-httpd-php-source .phps
SetEnv PHPRC C:/WINDOWS