SOLIDWORKS default templates and document templates have different settings and purpose.
SOLIDWORKS default template files used to start a new part, assembly, or drawing document are located in the folders specified in Tools > Options > File Locations > Document Templates. Each folder is represented with a tab in the ‘New SOLIDWORKS Document’ dialog.
During automated file creation, for example when importing files from other applications, mirroring parts or assemblies, or saving bodies or assemblies as part files, SOLIDWORKS uses template files specified in Tools > Options > Default Templates.
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If the path of default templates is incorrect, you will receive an error and a prompt to use a blank template.
Using the three-dot browse button to specify default part, assembly, or drawing template brings up the ‘New SOLIDWORKS Document’ dialog, limiting the selection to the existing file locations for document templates.