I'm just taking a stab in the dark here, but IIRC Apache looks at the file extension to know what to do with it.
So if you have a file index.html, it will simply serve it to the clients browser without putting it through mod_php to interpret the code, because it thinks its just static html. Whereas if it is a .php file then it will be parsed before before being served.
So either you should use the extension of .php if you want it to be parsed as php, or you need to change the setting in httpd.conf (keeping in mind the whole template thing) to tell Apache to parse .html files as php too.
Of course I could be totally wrong, in which case I'm sure someone will correct me.
