I'm new to XAMPP and PEAR and I had the same issue. I had run "pear install -a phing/phing" from a standard command window running as administrator. Everything seemed to install ok, but when using it I would get the same error.
The key was to run all the pear commands from c:\XAMPP\xampp_shell.bat. Then I found I could call phing -v from any directory regardless of being in the shell or a normal dos prompt and more importantly for me the package propel/propel-generator which depends on phing started working.
Hope this helps someone because it caused a lot stuffing around for me. I guess I'm just too used to windows, note to self, shell != dos prompt.