yes, you will have to upload from both Dreamweaver Sites.
For the existing site, set the Host directory on the Remote Info tab of the site definition to:
For the power store site, set it to:
this will put the site back together when it is uploaded to the server.
The error message you are getting is saying that there is not a localhost connection created to connect to the power store database. Once you have the power store files in place and edit the Connections/localhost.php file to connect to the powerstore database, you will fix that error.
In addition to the other steps I took, I did go into WA_Globals.php and changed the $WAGLOBAL_localRoot = "/powerstore/" which is what the virtual directory is named in inetmgr.