On my Machine (Win XP SP2) the function "win32_get_last_control_message" never returns 4 so i will have to reply to 0 also.

finally after mixing several examples i now have a version working woithout filling my event log with errors:

<?php

/*
 * PHP SAMPLE TEMPLATE
 */

/*
 * APP MAIN FUNCTION
 * Called each second after the function last time finished
 * Should not take longer than max 20 seconds to execute
 * ELSE you should call NTServiceResponder(); at least each 20 secs
 * WARNING: NTServiceResponder will exit; if there was a STOP request
 */
function Service_Main()
{
    // YOU APPLICATION CODE HERE !!!
    sleep(1); // dummy something
}

/********************************************************************
 *
 * SERVICE CONTROLLING
 *
 ********************************************************************/

$SERVICE_NAME = "phptestservice";
$SERVICE_DISPLAY = "Test Service with PHP";

// so u can get: $SERVICE_PATH_PARTS["dirname"] $SERVICE_PATH_PARTS["basename"]  $SERVICE_PATH_PARTS["extension"]
$SERVICE_PATH_PARTS = pathinfo(__FILE__);

$SERVICE_PARAMS = " run";

    if (!isset($argv[1]))
    {
        die("this application need to be installed as a service.\n run with param install");
    }

    if ($argv[1] == 'install')
    {
        $x = win32_create_service(array(
                                        'service' => $SERVICE_NAME,
                                        'display' => $SERVICE_DISPLAY,
                                        'params' =>  __FILE__ . $SERVICE_PARAMS,
                                        //'path' =>  $SERVICE_PATH_PARTS["dirname"] . '\php.exe'
                                        ));
        debug_zval_dump($x);
        exit;
    }
    else if ($argv[1] == 'uninstall')
    {
        $x = win32_delete_service('dummyphp');
        debug_zval_dump($x);
        exit;
    }
    else if ($argv[1] != 'run')
    {
        die("bogus args, needs to run as service");
    }

    // Connect to service dispatcher and notify that startup was successful
    if (!win32_start_service_ctrl_dispatcher($SERVICE_NAME)) die('Could not connect to service :'.$SERVICE_NAME);
    win32_set_service_status(WIN32_SERVICE_RUNNING);

    // Main Server Loop
    while (1)
    {
        NTServiceResponder();

        // Main script goes here
        Service_Main();

        sleep(1); // at least 1 sec delay per loop
    }
    win32_set_service_status(WIN32_SERVICE_STOPPED);

/*
 * Response to NTServiceRequests
 */
function NTServiceResponder()
{

    switch (win32_get_last_control_message())
    {
    case 0: // PATCH for: seems never to go to 4 (WIN32_SERVICE_CONTROL_INTERROGATE)
        win32_set_service_status(WIN32_SERVICE_RUNNING);
        return TRUE;
        break;
    case WIN32_SERVICE_CONTROL_CONTINUE:
        return TRUE; // "Continue"
    case WIN32_SERVICE_CONTROL_INTERROGATE:
        win32_set_service_status(WIN32_SERVICE_RUNNING);
        return TRUE; // Respond with status
    case WIN32_SERVICE_CONTROL_STOP:
        win32_set_service_status(WIN32_SERVICE_STOPPED);
        exit; // Terminate script
    default:
        win32_set_service_status(WIN32_ERROR_CALL_NOT_IMPLEMENTED); // Add more cases to handle other service calls
    }

    return FALSE;
}

?>

So after much searching I finally found all the peices to make a working windows service & server including:
- Installing & Uninstalling the service
- Starting & Stopping the Service
- Actually running a basic Server
- Responding to windows Service to Stop/Start/Restart 

I hope you find this useful! I did this using PHP 5.2 and the PECL library for 5.2 (PHP 5.3 at the time does not have a PECL Library compiled for it)

<?php
    //Service Settings
    $Service = 'MyServiceFinal';
    $Display = 'My PHP Service';
    
    //Server Settings
    $host = '127.0.0.1';        //Bind to IP #
    $port = 23;                            //On port #
    $max = 20;                            //Maximum Clients
    
    
    //Exit if no start-up argument is passed
    if (!isset($argv[1])){ShowHelp(); exit;}
    
    //Create Windows Service
    if ($argv[1] == 'install') {                         
    $x = win32_create_service(array(
        'service' => $Service,
        'display' => $Service,
        'params' => __file__ . ' run',
        'path' => 'c:\\php\\php.exe',
    ));
    debug_zval_dump($x);
    echo "Service Installed\n\n";
    exit;
    
  //Remove Windows Service
    } else if ($argv[1] == 'uninstall') {
        $x = win32_delete_service($Service);
        debug_zval_dump($x);
        echo "Service Removed\n\n";
        exit;
    
  //Start Windows Service
    } elseif($argv[1] == "start") {
      $x = win32_start_service($Service);
      debug_zval_dump($x);
      echo "Service Started\n\n";
      exit;
      
    //Stop Windows Service
    } elseif($argv[1] == "stop") {
      $x = win32_stop_service($Service);
      debug_zval_dump($x);
      echo "Service Stopped\n\n";
      exit;
      
    //Unkown Command
    } else if ($argv[1] != 'run') {
        ShowHelp(); exit();
    }

//Tell windows the service has started...
if (!win32_start_service_ctrl_dispatcher($Service)) die("Could not connect to service : $Service");
win32_set_service_status(WIN32_SERVICE_RUNNING);

// No timeouts, flush content immediatly
set_time_limit(0);
ob_implicit_flush();

//Server Loop
while (1) {
    usleep(500);
    
    //Handle Windows Service Request
    switch (win32_get_last_control_message()) {
        case WIN32_SERVICE_CONTROL_CONTINUE: break; // Continue server routine
        case WIN32_SERVICE_CONTROL_INTERROGATE: win32_set_service_status(WIN32_NO_ERROR); break; // Respond with status
        case WIN32_SERVICE_CONTROL_STOP: win32_set_service_status(WIN32_SERVICE_STOPPED); exit; // Terminate script
        default: win32_set_service_status(WIN32_ERROR_CALL_NOT_IMPLEMENTED); // Add more cases to handle other service calls
    }
    //Acutal Server Code

}

//Clean up and Exit
win32_set_service_status(WIN32_SERVICE_STOPPED);
exit;

//*************** FUNCTIONS ***************
function ShowHelp(){
    echo "Usage:
    install:\t installs servce
    uninstall:\t deletes service
    start:\t\t Start the windows service
    stop:\t\t Stops the windows service
    run:\t\t called by CMS to run the service
    
For information on code numbers type 'net helpmsg xxxx'
EXAMPEL: 'net helpmsg 1072'
    
    ";
}
?>