You cannot just run a source version through a web server without taking some precautions. The generator generates relative URIs which work nicely on the file-system level (i.e. when you open your app with the file:// protocol in the browser). But relative paths are not stable under a web server.
As a simple example, if you have a file /foo/bar/baz/index.html which references ../../bong/other.png, other.png will be found on the file system in /foo/bong/. But if you have a web server on this machine with a DocumentRoot of /foo/bar/, the URL to load the index.html is http://localhost/baz/index.html and the above relative reference is overstepping the web server's root and will cause an error.
One way to make this work is to make sure that your web server's DocumentRoot is above the root directories of all involved libraries your app is using (i.e. your app itself, the qooxdoo SDK, other lib/contribs you are using, etc.). See here for a fuller explanation.
Don't fiddle with QOOXDOO_PATH, as this is necessary to find the framework classes and build your app in the first place.
