There are two ways to create an agavi project using propel.

1. Pear-Way:
1.1 Install propel:

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pear install channel://pear.phpdb.org/phpdb/propel_generator
pear install channel://pear.phpdb.org/phpdb/propel_runtime

1.2 Install agavi:

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pear install channel://pear.agavi.org/agavi-1.0.0beta8

1.3. For each project, you create a new folder and run:

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agavi project-wizard

2. The custom way (later for deploying entire application + libs):
2.1 Create a new folder "myproject".
2.2 Create a sub folder myproject/libs and myproject/libs/propel and also myproject/libs/agavi
2.3 Download agavi's and propel's latest release* and paste the contents of the .zip/.tar.gz files in the corresponding directory.
2.4 Copy either myproject/libs/agavi/bin/agavi-dist to myproject/agavi (on linux/mac) or copy myproject/libs/agavi/bin/agavi.bat-dist to myproject/agavi.bat (on windows)
2.5 Create the project with :
a) Windows:

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agavi project-wizard

b) Linux/Mac:

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./agavi project-wizard

2.6. Open the agavi(.bat) file and change AGAVI_SOURCE_DIRECTORY to libs/agavi/src (or on windows libs\agavi\src)

I suggest you use the project-wizard helper only if you already know all the modules/actions you want to create. You can easily add them later with other helpers!

* Of course you can checkout also the latest svn from agavi's https://svn.agavi.org/branches/1.0 or propel's http://svn.phpdb.org/propel/trunk