SP2 works fine on XP with IIS and PHP
I recommend following the instructions from php.net and install the isapi version of php
I have php installed to c:\php however the php.ini that's active is in c:\windows
You will have to allow the IIS user (normally IUSR_computername user) to have permissions to the php executables in c:\php. IIS will not have any permissions to that folder otherwise, and your php won't work.
I have Zend Studio 5 and it all works fine with IIS, including debugging, and I have a virtual directory hooked to Eclipse 3.1 workspaces for php, and phpEclipse also works fine with IIS.
Make sure you are a local administrator user when you install IIS. Also, if you're not using the ntfs filesystem in your XP box I'd recommend converting. And turn off "simple file sharing" before installing IIS.