Don't you just LOVE dreamweaver sometimes? This problem is fun, and easy to fix...most of the time.
First off, if you are on Mac OS X ( I assume you are), make sure you have installed the PHP add-on from php.net.
Next, this is going to sound dumb, but, TURN APACHE ON...Go to apple, system prefs, sharing, turn ON personal file sharing....Just for kicks, go to http://127.0.0.1/~username. If you don't have anything showing up or an error, something is wrong. Make sure apache is turned on. You can see by taking out the username portion of 127.0.0.1, and if it shows a setup-completion page you are in the go.
Now, as far as previewing in Dreamweaver, that works sometimes, and not. The easiest way I do it is by going to http://127.0.0.1/~username/sites/websitename/index.php
Let me know if this works. It takes a little extra effort alt-tabbing, but at least you don't have to waste the extra 2 seconds uploading