If PHP is running in other locations, then it's a configuration issue with the server whereby PHP is not allowed to run in the folder you have specified. I can tell you filenames and areas to look for, but I'm personally have never found the XAMPP installation to be the most intuitive when it comes to editing which is why I pointed you in their direction.
If you look in the httpd.conf file, you should see a DocumentRoot defined. Make sure that the site definition is within that document root. There should also be a Directory declaration ( <Directory "/path/to"> ) that should match the path of your DocumentRoot. It is possible to serve documents from different areas of your computer. Ususally this is done when you have things like phpMyAdmin above the root, so if you see multiple entries in there, some of which XAMPP installs itself, you should leave them alone and ask their support forum for help because they will know which entries the application puts in that you will not want to remove.
