As I don't have the book (I have an old version and the examples are different), I can't tell you why it fails.
Yet, I can tell you by the error message that the server seems not to be configured to know how to deal with pages with a certain extension (in this case, php).
You need to tell IIS that php files need to be treated using php.ini
If it was a ASP file, I would tell you to go to Cotrol Panel > Internet Information Services > World Wide Web Services > Application Development Features
Then, you would have a list of features (asp, asp.net, CGIs, etc) that you will allow...
With PHP, I don't have a clue but I am sure that it is the first chapters of the book.