No I never did figure it out! There is very little information (almost none) on how to set MySQL up as embedded.
I know there is a way to use MySQL Embedded which means you do not have to run MySQL as a service, but have never figured it out.
I did find this program however, which runs MySQL Embedded and Apache and PHP as an exe (not as a service) so you can try this.
http://www.websiteondvd.com/
There is a free trial but unfortunately it is $299 to buy!