I was recently setting up WordPress to run locally on my development machine and when I tried to browse to the WordPress homepage locally, I recieved the error:

Your PHP installation appears to be missing the MySQL extension which is required by WordPress.

My configuration:
Windowx XP
Apache 2.2
php-5.2.8
MySQL 5.1

To correct this issue, I did the following:

1. In the Php.ini file (on my machine this is located at C:\Windows):
   Set extension_dir = "C:/Program Files/php-5.2.8/ext" (where php is installed on my machine)
   
2. uncommented (remove ;)
   extension=php_mysql.dll
   extension=php_mysqli.dll
   
3. Copied libmysql.dll from php dir to system32 (C:\WINDOWS\system32 on my machine)

Hope that helps anyone with a similar issue.