I'm sorry, I don't fully understand what you want to do... can you be more specific? 'configure Outlook to work with "localhost" on my desktop' doesn't quite compute with me.
Outlook and Outlook Express are mail clients; that is, they connect to servers and download mail messages stored on a server using either POP3 or IMAP, protocols used to read messages stored on an "incoming" mail server.
PHP is a server-side language and can be used to send emails using SMTP, a protocol used to send messages through an "outgoing" mail server.
That said... what exactly do you want to do? PHP's mail() function returns TRUE or FALSE, depending on whether the mail was sent successfully or not. If that's not enough verification for you, then you can use mail() to send messages to yourself. On a windows installation of PHP, you need to specify the SMTP server for outgoing messages in your php.ini file. You can set this to localhost if you have an SMTP server running. IIS comes with an SMTP server that runs as a Windows NT Service; you can install this and tell PHP (via php.ini) that your smtp_server is localhost.