Hi,
I've answered what i can:
1) The php.ini file needs to go to your windows folder, for example: c:\Windows
2) You can point your IIS to use the file inside the php directory, there is no need to move that to your windows directory, certainly our setup points to the file in the php folder.
3) Other changes you can make to your php.ini file can be to do with the SMTP settings for your e-mail server etc, you can also change the the file limits for upload_max_filesize for example.
Zend:
This will update your php.ini file with some more settings so you will need to make sure it updates the one in your c:\windows directory, the installer should know where to look.
MySQL 5
1) No, not as far as i know
2) I did most of my configuration using the MySQL Admin tool as its easier, you can also setup your user access rights in there as well, which is a bit easier
Hope this helps
Regards
Alan