When you create a site in DW, if you do not correctly define the site with its local folder and folder (if any) on your server space, you can get what you see now.
There is a section in the DW help files "Defining a Site" which should take you through this.
The biggest variable for you is whether you need to define a folder in your site access details or if you will be loading straight to the "ROOT" within the folder where your html files will reside.
What can be a revelation is to define the site with an empty local folder called "site" for example. Then download the basic site structure from the server. This will put the site folder structure into your "Local Folder" as defined in DW. You will then probable see a "public_html" folder or something similar.
That is where you put your site and then upload. This holds for all your basic pages and images. CGI and other clever bits may reside outside this "public_html" folder.
To do this, you will need to delete what you have uploaded so far. Make sure you don't delete anything that was there before you uploaded your site.
To answer one of your questions the "Root" is the level where your index.html or home.html will reside. The contents any folders such as images etc. will be residing 1 level below the "Root".
Yes your robots.txt should reside on the "Root" and should have no links to it.
If you enter www.mydomain.com/robot.txt into your browser, the contents of your robots.txt file should display.