Hi there,
It is a BAD example of what is really required. The point is You can create a folder, then open the terminal in there and Git clone it directly to it inside the folder there,
Then in the settings You’ll know the name of it so The environment can find it. Poor technical writing there, doesn’t convey the requirement correctly IMO.
I had to read it twice, initially. but it is working in the GUI AOK.
GL 
PJ 
Generating files from D:/Nordic/myapps/workspace/blinky/build_1/blinky/zephyr/zephyr.elf for board: xiao_nrf54l15
everything is short paths too, don’t get Long or you will get some goofy error messages unrelated to it.