I develop under windows with xampp too.
Did you make any changes on apache conf file ? (c:\xampp\apache\conf\httpd.conf). Make sure to set AllowOverride All under document root. This setting is by default.
Code:
<Directory "C:/xampplite/htdocs">
# AllowOverride controls what directives may be placed in .htaccess files.
# It can be "All", "None", or any combination of the keywords:
# Options FileInfo AuthConfig Limit
#
AllowOverride All
Did you change document root to somewhere else other than C:/xampplite/htdocs ?