Haha 
Windows XP with modifications, brought up some nice nostalgic memories 
I know the docs page is not quite where we want it to be but I want to still encourage you to use it. There you will find that the “openHAB Designer” is indeed not what you want to use: http://docs.openhab.org/installation/designer.html
The setup and connection to the network share is documented here (for others reading this): http://docs.openhab.org/installation/linux.html#network-sharing
Regarding your OH2 config question:
In short: If you want to use files, do that. If you want to manage other parts of your system with PaperUI, go for it. Just remember that the UI will never write back anything to the configuration files.