For a complete sample Nginx+PHP-FPM config, view this how-to: Nginx & PHP-FPM

In order to use path URL format and hide index.php on nginx+fastcgi+php, we need the following configurations.

First, we need to add PATH_INFO to the server configuration. Otherwise, we will not be able to use path URL format in Yii:

location ~ \.php {      
    fastcgi_pass  127.0.0.1:9000;
    fastcgi_index index.php;
    include fastcgi_params;
    fastcgi_param SCRIPT_FILENAME $document_root$fastcgi_script_name;
    fastcgi_param PATH_INFO $fastcgi_script_name;
    access_log off;
}

Second, we need the following rewrite rule to hide index.php:

nginx versions .7 and higher:

location /yiiGuestbook {
    try_files $uri $uri/ /yiiGuestbook/index.php?r=$request_uri;
}

nginx versions prior to .7:

location /yiiGuestbook {
    if (!-e $request_filename){
        rewrite (.*) /yiiGuestbook/index.php/$1;
    }
}

Please refer to the Guide for hiding index.php on Apache httpd server.

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FYI, it is good practice to have your 'root' declaration outside of the location blocks. Please refer to this article if you are new to nginx:

nginx-pitfalls