I have PHP configured so that magic quotes are on and register globals are off.
I do my best to always call htmlentities() for anything I am outputing that is derive
The best current method for preventing XSS in a PHP application is HTML Purifier (http://htmlpurifier.org/). One minor drawback to it is that it's a rather large library and is best used with an op code cache like APC. You would use this in any place where untrusted content is being outputted to the screen. It is much more thorough that htmlentities, htmlspecialchars, filter_input, filter_var, strip_tags, etc.