you're missing the point.
The testing server panel is where you declare the testing server settings
you are using an FTP connection to connect to the remote server in the testing server settings, there fore, you need to use the remote address and set the root directory since your host FTP connection does not connect to the site root.
If you want to use the local server for the testing server, then you would set the Connect Using option to Local and use the local path for the testing server files.