I need to know how to setup a testing server on dreamweaver. I also want it to be a local testing server.

Do you want to know how to set up the web server itself, or how to set up dreamweaver to use to local webserver as a testing server?

If you want to actually set up the web server, what operating system are you using? In the case of Windows XP (Pro only, not home) you will need to go into Control Panel -> Add/Remove Programs -> Add/Remove Windows Components and select the options under Internet Information Services that you need (Most likely just World Wide Web service and whatever other boxes get automatically checked when you check that one).
In the case of any other OS, there are other options...

If you just want to set up Dreamweaver to look at your local test server, just fill in the boxes.... post back if you need any help on what the individual boxes mean.

- Mina