dreamweaver or frontpage? - Inserting images

Hello,
I am trying to create my first html site in Dreanweaver to be used as a newsletter. One question - at the course, Katie - trainer, said that when creating a new site I should define the Default images folder as site root. But I the windoe for creating new site looks differently in Dreamweaver MX 2004 than in Dreamweaver 8 and I can not actually find where to set the default image folder..?

Or is it ok when I create the site with images saved on my computer and than upload the whole site online?..

Sorry if this is not clear, I am really a beginner..
Petra