In answer to the OP:
The PATH environment variable specifies which folders Windows will search in, in order to find such files as executable programs or DLLs. To make your Windows installation find your program, you specify the folder that the program resides in, NOT the program file itself!
So, if you want Windows to look for executables (or other desired files) in the folder:
C:\PHP
because, for example, you want to install PHP manually, and choose that folder into which to install PHP, then you add the entry:
C:\PHP
to your PATH environment variable, NOT an entry such as "C:\PHP\php.exe".
Once you've added the folder entry to your PATH environment variable, Windows will search that folder, and will execute ANY named executable file you specify, if that file happens to reside in that folder, just the same as with all the other existing PATH entries.
Before editing your PATH variable, though, protect yourself against foul ups in advance. Copy the existing value of the PATH variable to a Notepad file, and save it as a backup. If you make a mistake editing PATH, you can simply revert to the previous version with ease if you take this step.
Once you've done that, append your desired path entries to the text (again, I suggest you do this in Notepad so you can see what you're doing - the Windows 7 text box is a pain to read if you have even slight vision impairment), then paste that text into the Windows text box, and click OK.
Your PATH environment variable is a text string, consisting of a list of folder paths, each entry separated by semicolons. An example has already been given by someone else above, such as:
C:\Program Files; C:\Winnt; C:\Winnt\System32
Your exact version may vary depending upon your system.
So, to add "C:\PHP" to the above, you change it to read as follows:
C:\Program Files; C:\Winnt; C:\Winnt\System32; C:\PHP
Then you copy & paste that text into the windows dialogue box, click OK, and you should now have a new PATH variable, ready to roll. If your changes don't take effect immediately, you can always restart the computer.