It sounds to me like your host file is not setup correctly. You can quickly test this with the URL you are using. First, start up XAMPP. Then try the following URL http://127.0.0.1/test.php
. You should see your PHP output.
If you don't, then your server definately is not running, find your Apache area of the XAMPP install, goto the logs directory and check the error log for startup problems.
If you get the page, you need to fix your HOSTS file. On the specific Windows XP system I am using, the file is C:\WINDOWS\system32\drivers\etc\HOSTS
If you can't find it there, simply search your base Windows install directory. It is usually somewhere in there in a SYSTEM directory. However, if it isn't there, you need to make one. Create a text file and put the following:
Save it as "HOSTS" with no file extension and put it in \WINDOWS\SYSTEM (Win98/95/ME) or \windows\system32 XP. You might need to restart to make it take effect, but test using your original URL and it should work.
A possible complication is that your hosts file might be full "corrupt" entries. Certain spyware likes to change your hosts file to point to their website instead of local files on your system. You might even see entries that point to common sites like Google and Yahoo to specific IP addresses. These are all bad things.
You can try removing these entries (I would remove them all), but the spyware is likely running as we speak. It will continually reset your hosts and cause lots of problems. You'll need to remove it to procede. Try out Spyware Search & Destroy (Free) to attempt to get rid of it, or Ad-Aware SE ($$) if this is the case.
If you do find alot of Spyware on your system, I strongly suggest replacing Internet Explorer with Firefox. I recently did so on all my home PC's and while my kids somehow seem to find the IE icon occasionally, my incidence of Spyware has dropped significantly.
Hope this helps...