first, use 5.2.11 instead of 5.3. 5.3 will only install as a CGI module, it does not include the ISAPI extesnion:
PHP 5.2.11 zip package [10,270Kb] - 17 September 2009
md5: adac50ae1449b76f10ff1865bb4f94f1
For the error you are getting:
Go to Control Panel -> Programs and features.
Click the link for Turn Windows Features On or Off.
Expand Internet Information Services
Expand World Wide Web Services
Expand Application Development Features.
make sure all options are checked, especially ISAPI Extensions and ISAPI Filters.