The way to test your docs is not to drag and drop. If you drag and drop, your file is relative to the local machine, not the server.
In the address bar try typing the location of your file:
ex: http://localhost/phptest.php
this should let you see the output of your fileIt goes through the server. I tested with a simple echo test.
In a notepad file the one liner looks like this:
<? echo("nothing to write"); ?>
Save as phptest.php (double check the extension ".php" not ".php.txt")
put the file in your webroot (on PWS and w2k default is C:/inetpub/wwwroot)
hope this helps ya out!!