By the way the current security settings are set to high and also do not allow the use of http,ftp... protocols . I had tried changing these settings as well but they are always reset to high i.e will not change what so ever i do.
To test that apache is running and allowed to serve pages (HTTP) just type http://localhost/ or http://127.0.01/ both of those urls should give a apache default home page telling you that the webserver has been installed correctly.
Next "home/user/ " as you say would not correspond to the "localhost/" url. You might need to try http://localhost/~user/hello.php -- this still does depend on how your apache is set up (ie. it may not be set up to allow ~username forwarding/shortcut to user directories). Oh and by the way you might also need to place the file in the home/USERNAME/public_html/ directory.