I had also the same problem. I am using Easyphp 1.7 under Windows 2000.
It was solved by editing the "php.ini" file that is within the subdirectory "apache" under the directory where Easyphp was installed.
You have to go to the section called "Windows extensions" that is toward the end of that file and uncomment the line that reads ";extensions=php_gd2.dll" by suppressing the ";".
After saving the file and restarting Apache you would log to the administration of Moodle and update the configuration. You should see that the gd2 library is installed.
You must save the configuration and it's done !
Then, you should see the "browse button" in the optional section of the user personal information form that allows you to upload a photo.