1. make a test.inc file <% echo "test" %> in a directory in the include path
2. make a test.php file <% include("test.inc") %> in a *different* directory
3. browse test.php

It gives a nice message, telling you the include path:

Warning: failed opening 'top.inc' for inclusion (include_path='c:\inetpub\wwwroot\include') in C:\inetpub\wwwroot\default.htm on line 2

It works fine if I have the .inc file in the same directory.

in my php.ini file I have

include_path     =      c:\inetpub\wwwroot\include