I think its a path issue. If you open up the productdetail.ascx file you will see the following lines:
<link href="/css/lightbox.css" rel="stylesheet" type="text/css" />
<script type="text/javascript" src="/js/prototype.js"></script>
<script type="text/javascript" src="/js/scriptaculous.js?load=effects,builder"></script>
<script type="text/javascript" src="/js/lightbox.js"></script>
<script type='text/javascript' src='/js/jquery-1.3.2.min.js'></script>
The /css and /js folders are referenced from the portal root. Since you are running localhost you have an extra folder level. If you change the path references above and add your nested folder "dnn050501" the ligthbox effect should work.