NGINX reverse proxy to apache - Settings?

[agriz]

PHP Code:

####################################################################### 
# 
# This is the main Nginx configuration file. 
# 
# More information about the configuration options is available on 
#   * the English wiki - http://wiki.nginx.org/Main 
#   * the Russian documentation - http://sysoev.ru/nginx/ 
# 
####################################################################### 

#---------------------------------------------------------------------- 
# Main Module - directives that cover basic functionality 
# 
#   http://wiki.nginx.org/NginxHttpMainModule 
# 
#---------------------------------------------------------------------- 

user              nginx; 
worker_processes  2; 

error_log  /var/log/nginx/error.log; 
#error_log  /var/log/nginx/error.log  notice; 
#error_log  /var/log/nginx/error.log  info; 

pid        /var/run/nginx.pid; 


#---------------------------------------------------------------------- 
# Events Module 
# 
#   http://wiki.nginx.org/NginxHttpEventsModule 
# 
#---------------------------------------------------------------------- 

events { 
    worker_connections  4096; 
} 


#---------------------------------------------------------------------- 
# HTTP Core Module 
# 
#   http://wiki.nginx.org/NginxHttpCoreModule 
# 
#---------------------------------------------------------------------- 

http { 
    include       /etc/nginx/mime.types; 
    default_type  application/octet-stream; 

    log_format  main  '$remote_addr - $remote_user [$time_local] "$request" ' 
                      '$status $body_bytes_sent "$http_referer" ' 
                      '"$http_user_agent" "$http_x_forwarded_for"'; 

    access_log  /var/log/nginx/access.log  main; 

    sendfile        on; 
    #tcp_nopush     on; 
    tcp_nodelay     on; 

    #keepalive_timeout  0; 
    keepalive_timeout  65; 

    gzip  on; 

    # 
    # The default server 
    # 
    server { 
        listen      80; 
        server_name  domain.com www.domain.com; 

        #charset koi8-r; 

        #access_log  logs/host.access.log  main; 

       # location / { 
           # root   /usr/share/nginx/html; 
           # index  index.html index.htm; 
       #} 
        location / { 
                proxy_pass http://127.0.0.1:8080/; 
                proxy_redirect off; 
                proxy_set_header Host $host; 
                proxy_set_header X-Real-IP $remote_addr; 
                proxy_set_header X-Forwarded-For $proxy_add_x_forwarded_for; 
                proxy_connect_timeout 90; 
                proxy_send_timeout 90; 
                proxy_read_timeout 90; 
                client_max_body_size 10m; 
                client_body_buffer_size 128k; 
                proxy_buffer_size 4k; 
                proxy_buffers 4 32k; 
                proxy_busy_buffers_size 64k; 
                root /var/www/html; 
                index index.html index.htm index.php; 
        } 

        error_page  404              /var/www/html/404.html; 
        location = /404.html { 
            root   /var/www/html; 
        } 

        # redirect server error pages to the static page /50x.html 
        # 
        error_page   500 502 503 504  /50x.html; 
        location = /50x.html { 
            root   /var/www/html; 
        } 

        # proxy the PHP scripts to Apache listening on 127.0.0.1:80 
        # 
        #location ~ \.php$ { 
        #    proxy_pass   http://127.0.0.1; 
        #} 

        # pass the PHP scripts to FastCGI server listening on 127.0.0.1:9000 
        # 
        #location ~ \.php$ { 
        #    root           html; 
        #    fastcgi_pass   127.0.0.1:9000; 
        #    fastcgi_index  index.php; 
        #    fastcgi_param  SCRIPT_FILENAME  /scripts$fastcgi_script_name; 
        #    include        fastcgi_params; 
        #} 

        # deny access to .htaccess files, if Apache's document root 
        # concurs with nginx's one 
        # 
        #location ~ /\.ht { 
        #    deny  all; 
        #} 
        location ~* ^.+.(jpg|jpeg|gif|png|ico|css|zip|tgz|gz|rar|bz2|doc|xls|exe|pdf|ppt|txt|tar|wav|bmp|rtf|js)$ {root /var/www/html;} 
    } 

    # Load config files from the /etc/nginx/conf.d directory 
    include /etc/nginx/conf.d/*.conf; 

} 


This is the configuration.
But it seems there is some problem on this.

ip.address/some.html -- always throws 404 error
ip.address/some.php -- works good. But it seems both server are handling this request and the loading is very slow.

What have i done wrongly?
I used http://www.howtoforge.com/reduce-apa...-nginx-rhel5.2
using centos 6 64 bit.

Installed in the following way
yum install nginx || yum install httpd