I recently downloaded the full package version(recommended) of ZendFramework(2.0.5).And tried and failed to install in xampp(version 1.7.4) also my php version is 5.3.5 .
Your path should probably be C:\xampp\zend\library\Zend.
You shoulnd't take the framework to the global include path but have it as a dependency in your project, soon you'll have two projects with two different versions of ZF and then the global option creates troubles