...specifically says it's OK not having the config.xml and index.html in the same folder:
www: (required) this directory contains the html, javascript and other assets that should be included in your application. This directory should contain a file called index.html that is the HTML root of your application.
PhoneGap Build's only requirement for your application structure is that the config.xml and index.html is in the top level of your application. Other than that you can structure your application as dictated by your workflows.
This page: http://docs.phonegap.com/phonegap-build/getting-started/app-project-structure/
...specifically says it's OK not having the config.xml and index.html in the same folder:
However, when doing so, I get "Error - No index.html found" when attempting to build. Upon researching further, I came across the following page: http://docs.phonegap.com/phonegap-build/start/#structure_application
...which says:
I'm unclear on what the proper approach here is.