http://dmxzone.com/ShowDetail.asp?NewsId=5001
in a nutshell, this is what you have to do:
1. Find php_gd2.dll (usually in the c:\php\extenstion or ext folder) and copy this to the C:\php (assumes that this is where you placed all your php files). Note that in php.ini, there is a directive that tells php where teh extensions are, the default I have is c:\php.
2. Edit php.ini, look for ;extention=php_gd2.dll and uncomment it (i.e. remove the ';' in front).
Restart your web service or server if necessary.
See if this works for you. Cause it didn't for me, appears that I may have some other issues...