unzipping the drupal downloads with Pico zip onto windows xp creates one directory with all the files

Nothing wrong with tgz. The free www.7-zip.com and the popular WinZip and WinRAR will easily and properly uncompress tgz files nicely.

Uncompress the file.tgz. This will result in file.tar. Uncompress it and it will open in a folder Drupal with all the files and sub directories you need.

This still needs tweaking, then I will post for the handbook next week, but here you go. post comments.

Note, this guide is for setting up a development site on a Windows XP system. It is NOT suitable for use in setting up a Windows IIS server on the Internet. It does not take into account basic steps in securing the underlying OS or an IIS server against outside hacking. Windows XP is NOT Suitable for site hosting on the Internet.

Assumptions
system name: COMP1
database name: site_drupal
database user: site_user
password: changeme

Choose a naming convention of some sort. While your intention may only be to have one site, do not rely on this. Even when testing, practice good standards so that you may establish a habit of good practices.

all downloads are downloaded to a c:\support directory
applications are installed in a c:\app\ directory
Web site is localhost and installed in the default location of c:\inetpub\wwwroot
You are familiar with how to use Google to search for answers and perform troubleshooting in the appropriate forums.

NOTE: It is VERY BAD to install a production website with InetPub on the drive with OS (Ususally the C: Drive).

==============================================
Download the following in preparation.
Download php to c:\support\php
http://www.php.net/downloads.php
This example uses PHP 4.3.6 installer

Download the MySQL installer to c:\support\mysql
http://dev.mysql.com/downloads/mysql/4.0.html
This example uses 4.0.18

Download MySQL Control Center to c:\support\mysql
http://dev.mysql.com/downloads/mysqlcc.html
This example uses 0.9.4

Download wget.exe for Windows to c:\support\wget
http://studwww.ugent.be/~bpuype/wget/#download

Download Drupal 4.4.1 to C:\support\drupal\core
Download Modules of interest to c:\support\drupal\modules

==============================================
Windows XP
Go to add/remove programs.
Windows components
highlight Internet Information Services
-select details
-select World Wide Web service
Click ok or finish
Close out Control Panel
Browse to http://localhost
You should get the Welcome to Windows XP Server Internet Services page
-if not, troubleshoot before you go further.

==============================================
Now to the installs

Run the php installer
-when it asks for a directory location, install to C:\app\PHP
-Accept all the defaults (allow IIS 4.0 compatible)

right click C:\app\PHP\sessiondata and select Sharing and Security
-choose the security tab
-Click add - advanced -find
-select IUSR_COMP1
-click the write Allow box and ok
Do the same for C:\app\PHP\uploadtemp directory

Right click php.exe (and php4ts.dll) select Properties
-click the Security tab
Add / advanced / Find now
-select IUSR_COMP1
-The Read &; Execute box is selected by default.

php is now installed

From your Administrative tools menu, Launch Internet Information
Services Admin
Go down to your Default Web Site
-right click and select properties
-select the documents tab and click add and add index.php
-click ok and out
Open up Explorer and browse to C:\Inetpub\wwwroot and delete everything in it.

==============================================
Note: There are probably better ways to do this but this consistently works for me.

Install MySQL -change the install directory to c:\app\mysql
Accept all the other defaults.
browse to C:\app\mysql\bin and launch winmysqladm.exe
log in as user root and leave the password blank. (we're only using it to create the my.ini file)
anyway.
choose the my.ini tab,
uncomment port=3306
choose save modifications
close and relaunch winmysqladm

MySQL should now be running and responding on port 3306, you can test by telnet localhost 3306.
If not, troubleshoot before proceeding.

Now, let's set a root password.
c:\app\mysql\bin> mysql -u root
mysql> UPDATE mysql.user SET Password=PASSWORD('changeme') WHERE User='root';
mysql> FLUSH PRIVILEGES;
mysql> /q;

==============================================
Install MySQLCC accept all the defaults.
Launch MtSQLCC
Name: local
Host Name: localhost
User Name: root
Password: changeme

Select Add.
right click on local and choose connect
right click on Database and choose Create new database.
enter site_drupal
right click on site_drupal and connect
right click on the Users table -create new user
Username: site_user
Host: localhost
Password: changeme
Check site_drupal
Check All Privileges <-this is probably to many rights, send me an update
Exit MySQLcc

==============================================
Now, we are ready to start installing Drupal.

Extract Drupal core and copy all the files to c:\inetpub\wwwroot
Go open the INSTALL.TXT in c:\inetpub\wwwroot\install.txt
Follow the instructions on editing the php.ini file (c:\windows\php.ini)

Copy c:\inetpub\wwwroot\inetpub\database\database.mysql to c:\app\mysql\bin

open a cmd prompt
C:\app\mysql\bin>mysql -u site_user -p site_drupal < database.mysql
Enter password: changeme

If you get a c: prompt, then there were no errors. If there were errors troubleshoot and solve before you move on. This is not a Drupal issue, this is a mySQL issue. Choose the support forum accordingly.
You can view your success by using MySQLcc.

Open C:\Inetpub\wwwroot\includes\conf.php in an editor.
(I prefer Crimson Editor www.crimsoneditor.com as it has context highlighting)
Change line 17 per the Install.txt

$db_url = "mysql://site_user:changeme@localhost/site_drupal";
Line 31 will work as is, but it is a bad habit to ignore it, so change it to your computer name
$base_url = "http://comp1";

Alternatively you can replace it with this line that I found in the forums.
$base_url = "http://". $_SERVER['HTTP_HOST'];
(If you use host headers it will adapt nicely).

You are now at step 5 of drupal's Install.txt.

You can use the downloaded wget.exe to schedule tasks with the Windows Scheduler. I do mine every four hour. Yours will depend on your site config.