when I connect iPhone to iTunes on a Mac machine, I can rearrange the icons of the iphone from the apps tab but when I connect it to iTunes on a Windows machine, the icons on the apps tab are disabled and I cannot move them around. Is it something I am doing wrong or it is just how it is on Windows machines?
iTunes can be picky about syncing only to one computer. My guess is that you have your iPhone configured to sync with your Mac and iTunes on Windows sees it "married" to another computer.
I used to have a touch and that working with apps and rearranging their location worked fine in iTunes on Windows 7.