I went through a similar process. The .pkg file is now added, but when attempting to make, I get errors saying "file not found". I believe it's something to do with the relative directories being used, as when I put an absolute path in there it works fine.
Where is the directory that all relative paths are taken from specified?
Also, since I've only come into using CodeWarrior from version 2.8.3 which I recently purchased, I'm not sure how to build applications that suport earlier versions of Symbian OS, as I wish to target Series 60 1.0 as well as 2.0.
I believe the path will be relative to the directory specified in the Symbian Installation project settings panel.
As for supporting earlier releases, that can sometimes be difficult. It's a matter of making sure the APIs you are calling are backwards compatible, and that's not always well documented. I'd recommend asking this question on the Tools & SDKs forum; they should be able to give you a definitive answer.
Do you mean the panel you get via "Edit->Symbian Environments" menu item? The only directory to configure there is the Epoc Root. Is there somewhere else to configure the project root directory?