Problem: Was able to install the debugger just fine on Windows 7 system. Followed exact same procedure as on Windows 7 system, except for of course copying the 5.2 dll from the x86 folder. If I comment out the php.ini lines for the debugger Apache starts just fine. Also, I am running XAMPP on my localhost.

php ini settings:

[debugger]
zend_extension_ts="C:\xampp\php\ext\dbg-php-5.2.dll"
debugger.enabled=on
debugger.profiler_enabled=on
debugger.hosts_allow=127.0.0.1 localhost
debugger.hosts_deny=ALL
debugger.ports=7869

Solution: Commented out zend_extension to ioncube loader. Now works just fine.