It usual applies when the user is running in a chroot gaol - I'm no expert on this, but it seems that CGI is the way to go in this scenario, which of course is done for security reasons. There's actually some stuff in the PHP docs...
http://uk2.php.net/security.cgi-bin
I'm not saying its a good move though - far from it!!
General help
It mod-php is a MUST for moodle?
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