For some odd reason, all PHP files on this dev server ask for authentication. The iusr has read/execute/list permissions to the C:\php folder, and also the same permissions for the home directory of the site in question. I don't understand what the problem is... Seems to have started after upgrading to version 5.2.10...

Hey,

That is odd that it is only php files asking to authenticat.. I dont think its going to be IUSR permission on your PHP folder however. I would try right clicking on the site in IIS and going to permissions, make sure IUSR is there, then click advanced and check the box to replace permissions on all child objects. That should recursivly assign the IUSR permission on all file and folders for the website, this would be my first move.

If it works then you can just remove IUSR from any directories that dont need it after that. I realize that sounds odd, since you would assume non of these permissions had been affected or changed, but im pretty sure its where your issue is at. Also make sure anonymous access is enabled on the files and folders if that fails.