Setting homepage with WordPress

I’v installed WordPress 3.2.1 with Apache 2.2 and PHP 5.2. Trying to build a test site on my machine (localhost).
I wanted to integrate WordPress into the root so I’v copied the wordpress files into Apache2.2/htdocs directory. I’v created a homepage and blogs page from the administrative panel. I don’t see any of those html pages actually created in the htdocs directory.
Moreover, WordPress does not return the homepage (as created from the admin panel) at the root url i.e. when I open http://localhost, I see the htdocs directory contents instead of any homepage (i.e. after removing Apache’s default homepage index.html). Similarly http://localhost/wp-admin returns the directory contents. I have to go to http://localhost/wp-admin/index.php in order to view admin panel.
How do I render my homepage from root url?