There are often strong suggestions that Apache/MySQL/PHP should be set up in the Windows root folder, and dire warnings against using folders with spaces in the name. But as a relatively non-technical user, I hate cluttering my Windows XP root directory with folders that should be under Program Files, and of keeping any documents other than in "My Documents" (even though I agree that MS's folder tree is ugly).
Frankly I've never had any difficulty with Apache and MySQL under Program Files, PHP5 deep in the Apache tree, and all documents under My Docs.. Here are the related Apache 2 config lines I use in case anyone is interested (sorry if there are broken lines):
ServerRoot "C:/Program Files/Apache Group/Apache2"
DocumentRoot "C:/Documents and settings/UserNm/My Documents/Websites"
# PHP 5 module
LoadModule php5_module "c:/Program Files/Apache Group/Apache2/php5/php5apache2.dll"
AddType application/x-httpd-php .php
PHPIniDir "C:/Program Files/Apache Group/Apache2/php5/"