Lion has changed a lot of the ways in which applications interact with the system. Apple noted that as of Xcode 4.3 it would no longer reside in it's own folder, but rather in a contained app. You will have to manually update the path to be:
That is a hidden system path because of how Mac apps are installed and not a fault of Adobe here that you cannot open app packages within the Finder to select the Xcode application.
Thank you for the prompt reply. I have already tried this and still no luck. Dreamweaver does build the app, it just does not load it into the iOS simulator, thus requiring to run the app in xcode. Are there any other settings to consider to correct this?
I cant even get anything to even save in the settings for the ios path no matter what I type in. It's very frustrating.