Magento Stock Management – Debug/Disable Automatic Set Out of Stock When Lower Qty Reached

Set the simple product Visibility (Catalog->Manage Product->"Select Product"->General) to "Not Visible Individually". Place the simple product to "In Stock" and add Quantity. (Simple products will not show on the front end)

The Configurable product should now show the available simple products. A configurable products inventory is based off the simple product's inventory.

Hope this helps.

You can try below code for cancelling an order.

$orderModel = Mage::getModel('sales/order');
$orderModel->load($orderId);
if(!$orderModel->canCancel()) {
$orderModel->cancel();
$orderModel->setState(Mage_Sales_Model_Order::STATE_CANCELED, true)->save();
$orderModel->save();
}

In your code, actual code is missing for cancel the order, you had never called cancel() function of class Mage_Sales_Model_Order