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Tools->Options->Debugging & Executing->Server Execution Options, property Default Server for Web Modules and Default Server for J2ee Applications have "<no property editor>" as values. The value of the default server should be shown in this property, and the "..." on this property should bring up the "Select Default [Web|Application] Server" dialog as appropriate (same dialog if you visit the Runtime tab, Server Registry, Default Servers "Set Default Server" from either the J2EE Applications or Web Tier Applications node.
Not to be fixed in 3.5, storage is different in 4.0 anyway.