RESOLVED! When using php in CGI mode on a Windows IIS server make sure you have also installed and enabled FastCGI. Also run through the manual installation steps for FastCGI. It seems that even though I ran the FastCGI installer and the scripts not all the changes were implemented. After running through the manual installation and entering the values to the IIS metabase and the fcgiext.ini file everything now works.
FastCGI installation instructions: http://learn.iis.net/page.aspx/247/using-fastcgi-to-host-php-applications-on-iis-60
Also, contrary to popular belief and recommendations for fixing authentication issues with php and IIS, after reading the comment from Bill Staples in his blog ”Mime types are not used for dynamic content, so you should never configure the Web server mime types to serve PHP, or IIS is likely to serve out your source code as plain text.” Good to know. Thanks Bill.