These steps must be followed exactly. There are other situations when this issue occurs, but these are the only steps I was able to find to reliably reproduce. open JBDS with clean workspace open Teiid Designer perspective create new model project create a new empty VDB in the project expand the project in the Model Explorer, double click the VDB, do not click on the project select Window -> Open Perspective -> Other -> Database Development switch back to Teiid Designer perspective, do not click on the project switch to Outline select File -> Import -> File Source (Flat) Next, Next click New, define any flat file datasource, Finish under Source Model Definition, the Name is now prefilled, Location is empty Click "..." next to Location, select the model project, OK notice the wizard still says "Source model file location must be selected. Choose '...' button and select existing project or folder"