I placed the dbg-wizard in the top of my project path and received the following information:
What did I find out about your system

I assume that you placed me in the directory of your main php script and on your PhpED machine pointed your browser to me – like this: <URL of your web site>/dbg-wizard.php

I see that:

* PHP Version: 5.2.0
* Web Server: Apache/1.3.37 (Unix) PHP/5.2.0 mod_pubcookie/3.3.2b mod_ssl/2.8.28 OpenSSL/0.9.7i
* Server Name: applyweb-dev.cs.cmu.edu
* OS: SunOS
* Your Client IP Address: 128.2.223.97
* Your Server IP Address: 128.2.205.246
* Port: 443
* Your Web Server and PhpED are on different machines
* Path to website files: /usr0/wwwsrv/htdocs/_dev/admin/
* Document Root is: /usr0/wwwsrv/htdocs/
* Your PHP.INI file is /etc/php5/php.ini
* PHP extensions directory is /usr/local/lib/php5/lib/php/extensions/no-debug-non-zts-20060613/
* DBG (PHP DEBUGGER) is NOT INSTALLED

How to install Server side DBG module

I noticed that DBG (PHP DEBUGGER) is NOT INSTALLED on your server applyweb-dev.cs.cmu.edu.

Your DBG Module is: dbg.so-5.2.x located in the tarball in <PhpED install path>\debugger\server\SunOS\
To install it, please do the following:

* Copy dbg.so-5.2.x located in the tarball in <PhpED install path>\debugger\server\SunOS\ into /usr/local/lib/php5/lib/php/extensions/no-debug-non-zts-20060613/ on your server applyweb-dev.cs.cmu.edu. No NEED TO CHANGE THE NAME OF THE MODULE!!
* Add the following lines to /etc/php5/php.ini
extension=dbg.so-5.2.x
[debugger]
debugger.hosts_allow= 128.2.223.97 localhost
debugger.hosts_deny=ALL
debugger.ports=7869, 10000/16
* debugger.hosts_allow has should be in format debugger.hosts_allow= host1 host2 host3, where host1, host2 and host3are host names or IP or network addresses allowed to start debug sessions. If you run debug session through an SSH tunnel , you need to list just one local IP address only (localhost).
* Restart web server (SIG_HUP or httpd reload won't help!)
* Launch phpinfo and check its output. Make sure that one of the topmost headers contains
Zend Engine v1.3.0, Copyright (c) 1998-2003 Zend Technologies with DBG v3.1.9, (C) 2000,2005, by Dmitri Dmitrienko

How to setup your PhpED Project Properties

I can suggest the following settings for your Project to debug PHP scripts on Server applyweb-dev.cs.cmu.edu :
You can create new Project by selecting File->New Project or by selecting New Project in the Workspace Pop up Menu
In the Project Properties Dialog set:

* Project -> Root Directory:
o

Select the location where you will store the copies of the files from /usr0/wwwsrv/htdocs/_dev/admin/ from your server applyweb-dev.cs.cmu.edu .
Note: if you are using Samba or some other file sharing system, you can simply point Root Directory to /usr0/wwwsrv/htdocs/_dev/admin/ instead of copying it
* Mapping -> Run Mode: HTTP Mode (3-rd party WEB server)
* Mapping -> Remote URL: https://mywebserver/_dev/admin/
* Mapping -> Remote Root Directory: /usr0/wwwsrv/htdocs/_dev/admin/

I set up my project as follows, but I still get the "Can't run "c:\www\htdocs\admin\index.php" file. Make sure that "Remote root directory" and Root URL'. are correct in the project settings.

What am i missing?

Thanks!

please check that there are no spaces added by mistake when you copied-pasted remote-root and/or URL from the dbg-wizard page

There are no spaces. I even re-typed them in just in case.

I tried almost the same configuration and did not get any problems.
Please try the following:
-quite the IDE
-open <your project>.ppj in an editor (it's just a regular ini file)
-make sure there are no extra spaces or any other unexpected things in the values
-save it and start IDE

No spaces in the file, but whenever I restarted the IDE, it worked.

No explanation but it works now.

Thanks!