I've done many of these installs. Most of my servers run IIS5 with PHP4.x, but right now I'm in Apacheland.
I will review this later. But it's probably nearly good to go.

As a general note, remember IUSR_WebUser needs read permission on any files required to execute PHP (PHP connector DLL and/or EXE plus depend DLLs and the extensions), and read/write permissions to the session & upload folders.
These are defined in the php.ini, see: Php.ini common directives

Once you have PHP nicely installed, see: PHP Install
You need to add the connector to IIS.

It's pretty well documented here: http://us2.php.net/manual/en/install.windows.php

On IIS5 your connector will pretty much look like:
Executable: E:\Inetpub\php\sapi\php4isapi.dll
Extensions: .php

or if using the CGI version (the .exe), don't use that version unless you really have to:
Executable: E:\Inetpub\php\php.exe
Extensions: .php (or .php4 if you already have .php mapped to php4isapi.dll)

Now to understand and control what php.ini gets loaded see: http://us3.php.net/configuration

To test, create a file like "test.php" in this file simply paste: <?php phpinfo(); ?>
Now loading that file, in your browser, should return a page with all your PHP settings.

---

For IIS6, you basically have the additional step of making sure the connector (DLL and/or EXE) is allowed, in IIS --> "Web Services Extensions"