I don't think RapidPHP will help that much - its really HTML and CSS that the theme is made up of. Wordpress is built using php, but the templates, etc, are HTML and CSS.
I've not used Wordpress in anger to see how a theme is built, but this site has some nice themes:
http://www.freecsstemplates.org/
Assuming RapidPHP can easily edit HTML and CSS for you, it is very easy to get RapidPHP talking to Xampp. There are a couple of tutorials and guides floating around already - I'll try and find the URLs for you, but a forum search should find them.
Finally, upgrading Xampp is simply a matter of downloading the latest version. Away you go.
One thing to bear in mind, is that you really need an Xampp install that matches the setup (ie, versions) you're finally going to be using. Its pointless downloading and using Xampp with php5 if you're going to host Wordpress on a server thats using php4.
But you knew that already...