Version 7 (RC) on IIS? How did you solve it?

Just wondering if anyone got v7 running on a IIS server already... I'm trying to figure out some weird stuff which won't allow me to use Fusion like I want to ;)
(for example: a config file which can't be found unless I've stripped all rights from the install folder of Fusion. This requires me to login with my FTP account on the web server in order to view the site. Not a nice situation unless you want your account info wandering over the net).

some details on the server:

IIS: 6
PHP: 5.2.5
MySQL: 5.0.51a

Now I'm just wondering if there's something very silly I'm not seeing right now or that something else is wrong :) (I suspect the first :D ).
So far I've figured out the checking of the files is somehow not working as it should:

// Locate config.php and set the basedir path
$folder_level = ""; $i = 0;
while (!file_exists($folder_level."config.php")) { 
$folder_level .= "../"; $i++;
if ($i == 5) { die("Config file not found"); }
}
require_once $folder_level."config.php";
define("BASEDIR", $folder_level);

Whatever I try, the file_exists() just keeps popping out false, basically resulting in a rather nasty error which I don't want of course.. I already uploaded a very clean test file just doing the same check:

if (file_exists('config.php')) echo "success..";
else die("what did you expect");

Guess what happens ;) I get the success message, so it doesn't seem to look like a problem with the hosting company or something :(

I'm getting kinda stuck right now trying different things and so on, so any help would be appreciated :)