To disable this web server check, comment line 1044 in lib/setuplib.php. Add the following line right under it:
$rurl['fullpath'] = $_SERVER['REQUEST_URI'];
Please inform the Moodle developers that Moodle works just fine with Hiawatha.
Use at least the following configuration options for your virtual host:
StartFile = index.php
EnablePathInfo = yes
TimeForCGI = 10