The "setup" script will ask for the Configuration path for
the php3.ini file. It gives you:

Default config directory? (`yes', `no' or dir) [yes] :

When you hit enter (answer yes is default), you are given:
 
Enter Configuration file directory [/usr/local/lib] 

When you answer no, the value no is actually used
as the directory. This is sort of backwards. No should
prompt you for the directory, yes should remove
the configuration switch all together, anything else
should be put as the directory.