Im a part time ee student and am just getting into micros so excuse my ignorance.

I use the MPlab to program and watch the micros and I use circuit maker to draw and sim schematics, but I just watched a video where the guy used a program that did both.

What is the best software to simulate a program on a PIC18 in an actual schematic?

 

"Best" is very subjective, and everyone will have different answers. There is no "right" or "wrong" here. I suggest you try a few and see what you think. In the past I have used Proteus and Multisim to simulate PIC operation. I haven't done much digging to see what kind of "watch" functionality you can get from them, though.

Matt