I've heard you can use any text editor to make .php files. When I save a .php file on NotePad it changes to php.txt which I again manually change to .php but then the file becomes unreadable. Is there anyway to fix this or is that just how it works?

When you're saving in Notepad, choose 'All types' where it says 'Save as type...' otherwise it will save it as txt by default. So type in filename.php.