I am unable to create the new project at the desired location. What could be the possible reason and how to resolve this?

To create a project at the desired location, you have to specify a folder that does not exist yet (even if you have created specially from the Browse For Folder dialog box using, Make New Folder option). For example,

If the desired location for your project is,

C:\....\FSLMQX3.7\demo

then in the Location text box, append the non-existing yet project folder name, for example, " PE_TEST_K60", therefore, the final location should appear as:

C:\....\FSLMQX3.7\demo\PE_TEST_K60

Another reason could be that you are creating a project with a folder name which already exists in the workspace. Check your workspace folder if the same name already exits and choose a different project name.