There is a news entry for PHP 4.0 RC1:

Modified the registry INI entry reader (Win32) to work with drive letters. For example, if you wish to wish to specify INI entries for C:\foo\bar, you should create HKLM\PHP\Per Directory Values\C\foo\bar in the registry, and add string values for each directive you want to override in this directory (Zeev)

I didn't find any more documentation. This should be marked as documentation bug.

Are you sure you're just passing a directory name? Like -c "c:\myinifiles\site7" which does not include "php.ini" itself?

In 4.3.0 you can pass the filename as well as the dir name, but that didn't work in previous versions.

Can't get it working with 4.2.3 or 4.3.0 and I have tried using c:\php\php.exe -c "d:\phpsite1" and also with specifying the php.ini file directly in "c:\php\php.exe -c "d:\phpsite1\php.ini" which also does not work. I have been checking the php.ini variables with phpinfo after each change and seeing no difference. It keeps coming back with the php.ini file is c:\winnt\php.ini and checking variables like SMTP which is different in both files shows the new php.ini is not being used.

In regards the other post about the news article - this does not apply as php.ini can specify all config variables and the 'registry per directory' method is very limited as to changes that can be made.

..petar

The only way around this problem is to run multiple copies of php ( >= 4.3.0) and keep the php.ini in the same directory as the php binary. This way the correct php.ini is loaded for the correct instance. 

Now it is possible to give each IIS Virtual server their 'own' copy of php and keep them in their own sandpits.

Not really the solution I was looking for but can live with it.

Thank you for taking the time to write to us, but this is not
a bug. Please double-check the documentation available at
http://www.php.net/manual/ and the instructions on how to report
a bug at http://bugs.php.net/how-to-report.php

-c has been purposly unavailable to PHP being executed under a web server.  Use registry entries or seperate installations to provide unique configurations.