This is mainly a note to myself, but perhaps it wil help someone else as well.
Although all of the sites I work on end up being hosted under LAMP, I develop most of them locally on my XP machine using the built in IIS for localhost.
The only problem I have ever run into (well once I got the whole thing working anyway) is that IIS does not have URL rewriting, and without rewriting there are no clean-urls, and without clean-urls there is no services/AMFPHP.
I just ran across this node http://drupal.org/node/149318 that mentions an OPEN SOURCE Isapi rewrite filter (http://www.codeplex.com/IIRF).
Now to install and test it out.
More info will be forthcoming.