It appears as if PHP generates no output when called as an apache subprocess (It may not be apache specific).  But I'm running Apache 1.3.23 with mod_layout 3.0.4, and here is the problem I'm having:

Load http://ged.dynodns.net/band/index.php, and you will notice that both the header and footer are generated fine (both PHP files).  But the main file, index.php, generates no output, yet PHP returns a status of 0 (success, I believe).
I can show that it is most likely not a mod_layout problem, as it generates output just fine for regular HTML files (check http://ged.dynodns.net/band/test.html as a test case).  So I am inclined to believe that PHP is having a problem with being a subrequest in this particular instance.

I've looked at the source for mod_layout and tried to find a possible problem, but all the code has been abstracted such that it should handle any specified mime type (application/x-httpd-php is accepted by default, so that shouldn't be the problem either).

If needed, I can provide the code that calls the main page (index.php, in our example), if need be (its open-source).

Configure line:
./configure
  --with-apxs
  --disable-short-tags
  --without-mysql
  --with-pgsql=/usr/pgsql

The php.ini can be viewed here:
  http://ged.dynodns.net/band/php.ini