the error you are getting on editing the server behavior is because the PowerCMS Files are not at the root of the Dreamweaver site on your local computer.
to be able to edit the server behaviors, the CMS files will need to be at the root of the Dreamweaver site, dont confuse this with your remote site.
Really, this is academic though. the way you have it set up will work.
I only commented on your post because I wanted other people reading it to know that it is not the correct way to do it.
What you have works, that's fantastic, and you dont need to change anything.
But people reading your post are going to think this is the way it should be done, which is not the case.