Totally agree with Glenn and Torvista. Using xampp 1.8.2.x (with recent heartbleed fix) on xp sp3 (limited to 3.2Gb ram) without a problem (although the only thing that annoys me is the 1440s timeout in phpmyadmin). Hardrive was partitioned early as C:, D: and E: with xampp installed on D:, just in case C: got corrupted. Have had to reload xp twice since running xampp.
On localhost, your store folder can be named anything you like, not necessarily corresponding with that of your website. It is a good idea to name your db and store folder exactly the same, and also to include the zc version number and other memonics in the name, because you will probably want to test various templates and mods separate to your development site, and because dropping an entire db and deleting the corresponding store folder to start afresh is often quicker than undoing botched changes. After a bit of practice you will find it only takes about 10 minutes to create an entire new store and db. So for example, I use shop151 to denote a standard zc 1.5.1 version, and then shop151rx to denote the use of a responsive template "X", and then shop151rxy to denote the inclusion also of a particular mod "Y" (eg superOrders). After thorough testing, it is a simple matter to copy whole file changes to your development site. Note zc152 is not that far away.
Also download (open-source) Notepad++, Winmerge, Windows Grep and Irfanview, and get into the habit of keeping track of your changes (spreadsheet and wordpad).
Hope this helps.
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