Why is the HTML editor deciding that the site root is up one directory from where it actually is. Why is it using /htdocs/ 
because that is the actual site root as far as the domain is concerned.
"Site" means different things in different contexts.
in mamp, the address:
localhost/
maps to the the htdocs directory
if you create a subdirectory:
htdocs/mysite/
the root of the site:
mysite/
is still at:
htdocs/
it is just looking up one directory from the root to:
htdocs/mysite/
by creating the subdirectory you are not creating a new website.
you can set mamp up to use subdomains which would map the new sudirectory to a new site address.
you could set it up to map the address:
mysite.localhost/
to the folder:
htdocs/mysite/
using the subdomain approach:
mysite.localhost/
the subdirectory now becomes a new site.
I think you are confusing the Dreamweaver "Site" concept and applying that to your sites host, the concept of the site host is different than that in Dreamweaver.
i found a tutorial for setting up sub domains in mamp here:
subdomains-for-mamp-dev-environment/
