The dialog shown when clicking "Action One" is ActionOneDialog.xdl. The dialog itself contains information how to edit it.
The DialogHelper contains some helper methods to work with the dialog.
To debug the Java code, just stick a breakpoint anywhere in Eclipse and start your run configuration in debug mode.
If you add non-code files (or an external .jar) to your extension, you need to mention them in package.properties, else they won't be included in the packaged extension.
Now go on customizing the extension to your needs. Some helpful links: