I would like to use a vm ubuntu installation as my testing environment, but to ease workflow, I have symlinked /var/www to a windows share. Everything looks good when browsing files and the owner and group both are showing up as www-data, but I can not seem to get apache to respond with anything other than permission denied. Obviously there are still some permission issues between Windows 7 and Ubuntu, but I don't know where to go
It sounds like this is a problem with Apache permissions/settings, rather than Windows (filesystem) permissions. Apache won't execute scripts, etc in the /var/www directory unless you've modified the conf file to tell it to do that. Generally, you'd want to do that on a subdir-by-subdir basis anyway.
To test if this is the case, put a very simple test html file at the root of /var/www and see if you can access it from your apache server.
IIRC, you also need to make sure any kind of script has the execute permission flag set, i.e.