PHP code file doesn't work in Dreamweaver, but does on web server

Although I've been a programmer/systems analyst for 50 years, I'm new to web programming; I guess this makes me a dinosaur.  Anyway, I've been learning PHP/MySQL and Dreamweaver, and have encountered a strange issue.  I created a small (test) web page with a two field form (i.e. Name and Messagel) and a "Go" button which calls a small php file (i.e. action="helloworld.php" method="post").  The php file simply collects the two fields and "echo"s them to the screen.  When I try to execute the form in Dreamweaver, using the "Live View" button, nothing happens.  When I use the "Preview/debug in Browser" button the page opens in the (IE7) browser, but when the Go button is pressed, the Dreamweaver item in my taskbar starts blinking.  When I then switch back to Dreamweaver, the php file has been placed in the workspace, and the cursor is located at the very start of the code (ie @ the "<?php).

Now here's the strange part (at least to me), If I publish the two files to my web server (index.html & helloworld.php)  IT WORKS.  I can enter data into the two fields, press the Go button, and the php code echoes the information on the screen.  Can anyone tell me what I must be doing wrong to cause this?