Chrome is asking you to "save file as" because your php file handler is botched and when Apache doesnt know how to use a file it just offers it up for download. Manually configuring Apache to work with PHP handlers (outside of mod_php) is not for the faint of heart, so I applaud taking on this challenge. While I've only had experience with CentOS and not Ubuntu, outside of any get/make differences, this guide should apply universally to cover the steps and see if you missed anything.
http://markus.revti.com/2010/03/installing-suphp-on-centos-5/
More than likely your problem is not from bad php.ini or htaccess settings, its from you missing something in your httpd/virtualhosts config where you load the suPHP module, turn on the suPHP engine, set the suPHP handler, setting your suphp.conf file, etc. If that were all correct and it were just a permissions issue of the suPHP_UserGroup your server would not be barfing .php source code files.
Get it serving pages right before you go tweaking your php.ini. I'm not sure what those values are being suggested for but those are not ideal, like for example the max_execution_time of 20000 seconds (5.56 hours) or having post & upload limits the same size as your PHP script memory limit.