Automatically split files when multiple objects separated by "/"
This option will automatically split files when Toad comes across a "/". Toad assumes you want to split different objects onto different tabs.
Each section divided by a forward slash will be placed in a separate tab.
Prompt to split files
When this option is checked, Toad will ask if you want to split a file into separate tabs. Splitting the file is recommended, but you can choose at the prompt to keep the file as one.
Note: If you do not split the file, compiling will be disabled.
Never split files
When this option is checked, Toad will always load files into one tab and never split a file into body and spec. Note: This option disables compiling.
In addition, you can decide how you want the Package to be displayed in the Editor. For example, if you choose to load the Package into a single tab in the Editor, you will be able to compile and debug the Package the same as you would if you loaded them into separate tabs. But, in any case, you have to begin your debugging session in the Body otherwise the debugging buttons will be greyed out…..

If you are using (and want to watch) Package variables, you must tell the Debugger what type of variable it is

After you have added a Watch to the variable, double-click in the Watches tab to open its properties. Click the Package Variable check box and select the Package name and Owner from the drop downs. You can also define the format of the values expressed (Floating Point, Scientific, etc). As you debug, you will be able to track the values of the Package variable as it changes. Note the Break on value change.
Also, make sure you have the below options set and that you have the DBMS Debugger option set (not JDWP). Options | Debugging.
The other option you should set is the “Step through package initialization”.
When you have a Package that includes Package variables, the first time you execute a Procedure in the Package the variables are initialized. If this option is checked, the Debugger will step to the lines of code where the variables are declared and initialized. If the option is unchecked, the Debugger will never step into the Package initialization.

Debugging Packages in Toad is a breeze, but if you are new to this, there is a very simple example Package available in the Toad Help called Trigonometry which you can install and use as a test (Help | Index | keyword Package).
Once you’ve completed your debugging session, the code will have to be re-combined back into a file. Again, refer to the Options under “Saving files” to decide how you want this done.
When a Package Spec and Body are both loaded from database into the Editor, and you choose to save to file, Toad’s behavior depends on these options.
If only the Spec or only the Body is loaded, then only the object that is loaded will be saved to file.
The default is Never combine spec/body.
Automatically combine spec/body when saving object to file
Puts Spec and Body into the same file.
Prompt to combine spec/body
Prompts you every time you close the files.
Never combine spec/body
Saves only the object on the current tab.