Resolve “Path not found” error for include_path within project source

I'm migrating a project over to phpstorm, but I'm not sure how to set this situation up correctly and can't find clear documentation.
My project structure is like this:

\projectroot         <-- My phpstorm projects points at this directory
--\public_html       <-- The web server points here
----\.user.ini       <-- has include_path="C:\sites\projectroot\source"
----\index.php       <-- and a few other php files
--\source            <-- The folder containing real code
----\application.php <-- One example file
--\content

index.php
includes files using
require_once 'application.php'
and within the source folder, files routinely do things like
require_once 'model/user.php'
to include other files within the source folder. How do I correctly get phpstorm to resolve these includes for this project only. I see that there is an includes section under Settings > PHP, but it's not clear if that is per project, and looks like that is maybe supposed to reference external libraries anyway.
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What's the exact version of the IDE do you use? (Help | About) Can you please provide the sample code to reproduce the issue?

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