Here is a sample on how to lay out project's directories and how to enter them in CDBuilder.

1. Start CDBuilder
2. Create project input directory on your harddisk - let it be named c:\mycds\cd1\in (windows) or ( /home/YOURLOGIN/mycds/cd1/in for OSX or Linux) and project output directory - c:\mycds\cd1\out (windows) or ( /home/YOURLOGIN/mycds/cd1/out for OSX or Linux)
3. Create subdirectories 'content' and 'databases' inside project input directory, that is c:\mycds\cd1\in\content and c:\mycds\cd1\in\databases (windows) or ( /home/YOURLOGIN/mycds/cd1/in/content and /home/YOURLOGIN/mycds/cd1/in/databases for OSX or Linux)
4. Copy content of directory 'extensions/data' from Demo CD to subdirectory 'databases' inside your project input (so you would have directory named c:\mycds\cd1\in\databases\mysql_data on Windows or /home/YOURLOGIN/mycds/cd1/in/databases/mysql_data on OSX or Linux.
5. Copy your web files to c:\mycds\cd1\in\content (windows) or /home/YOURLOGIN/mycds/cd1/in/content (OSX, Linux) - that is if you expect to have document with URL 127.0.0.1/myfile.shtml working, then you should have file with name c:\mycds\cd1\in\content\myfile.shtml (windows) or /home/YOURLOGIN/mycds/cd1/in/content/myfile.shtml (OSX, Linux).
6. In CDBuilder, click Project, New, and in "Project Input directory" entry type c:\mycds\cd1\in (windows) or /home/YOURLOGIN/mycds/cd1/in (OSX, Linux); type "../out" in "Project Output directory". Enter project title (use a long name as you wish, spaces are OK). Click OK.
7. Do Project, Site settings. Click General, Main Properties. Enter 'content' as 'Directory with contents of document root', enter 'databases/mysql_data' as "Directory with MySQL database files (not sql dumps), if used"; enter 'databases/sqlite_data' as "Directory with SQLite database files, if used".