Open up the php.ini file located at C:/xampp/php/php.ini. Add the following to the file after all of the other extension declcarations:
extension=php_memcache.dll [Memcache] memcache.allow_failover = 1 memcache.max_failover_attempts=20 memcache.chunk_size =8192 memcache.default_port = 11211
Believe it or not the next step took me the longest to get done. All of the instructions I read online for doing this pointed me to http://downloads.php.net/pierre/ to download the memcache dll file. Unfortunately you can only find the VC9 download on that site, xampp 1.7.4 on the other hand uses VC6. According to http://windows.php.net/:
If you are using PHP with Apache 1 or Apache2 from apache.org you need to use the VC6 versions of PHP
If you are using PHP with IIS you should use the VC9 versions of PHP
I was able to find the VC6 dll after some searching and if you also require it you can download it right here. http://www.levijackson.net/public/files/downloads/php_memcache-cvs-20090703-5.3-VC6-x86.zip
Once you download the proper memcache dll you need to unzip it and place it in C:/xampp/php/ext/
The final step is to restart xampp. After that give it a go, try out some of the memcache functions found on the php manual web site.