Look basically, if your host is happy with you running a server off your DSL line, then go for it. You *could* use IIS, but its one of M$'s products that never really took off and I dont recommend it.
Apache does the job alot better, but for MySQL and PHP intergration it needs a little bit of technical know-how. I personally would recommend that you go out and find yourself an old p2 or p3 and stick
FreeBSD on it. Apache and stuff should come pre compiled like it does on RH9 and if not, it should be easy to set it up.
On the setup you said you are going to be using, I'd definitely go for the simpler installation of a straightforward
WampServer setup. You cant go wrong. Its a couple of clicks and *BANG* you are in. Localhost and away you go.
The most important thing, is that you clear up with your ISP before you set it up, or they will block your incoming port 80 on your line, which wont be SOO great
Regards,
~Equinox