Oh okie, i thought so 
Till now i have been doing the three steps that you mentioned.
and i can see Move Project to IS pacakge when i right click, but it doesnt work, the package does not move.
Also there is no log as well, i increased the logging mode to see any inputs but dint see any error message or any message related to packages.
But when i took the workspace and mapped it to Package directory, it works.
Regards
A
#webMethods-General#webMethods#Integration-Server-and-ESB