[SOLVED]local installation moving system and application folders access denied

[eluser]Cgull[/eluser]
Hello,

Using Codeigniter 2.1.3 WAMP 2.2 php 5.3.13 apache 2.2.22

I am following a tutorial and trying to move the system and application folders.

So my folders look like this:
c:\sites\mysite\
- system
- application
- public_html\
- assets
index.php
htaccess

In my index file:

Code:

$system_path = '../system';

$application_folder = ../'application';

In my config file:

Code:

$config['base_url'] = '';
$config['index_page'] = '';

My hosts file:
127.0.0.1 mysite.dev

My vhosts file:

Code:

<VirtualHost *:80>
    ServerAdmin [email protected]
    DocumentRoot c:/sites/mysite
    ServerName mysite.dev
ServerAlias mysite.dev
<Directory c:/sites/mysite>
  AllowOverride All
  Order deny,allow
  Deny from all
  Allow from 127.0.0.1
</Directory>
    ErrorLog "logs/mysite.dev-error.log"
    CustomLog "logs/mysite.dev-access.log" common
</VirtualHost>

My htaccess inside public_html:

Code:

RewriteEngine On
RewriteBase /
RewriteCond %{REQUEST_FILENAME} !-f
RewriteCond %{REQUEST_FILENAME} !-d
RewriteRule ^(.*)$ index.php?/$1 [L]

My site worked fine if all the folders were inside mysite and I did not have a public_html folder.

Now when trying to get to the site http://mysite.dev I get the notorious error 403 Forbidden You don't have permission to access / on this server.

Can someone please help?