If you are not encountering an error (see note below), then whether you can select or create a DDF depends on the Always use Document DDF DesignMerge preference (DesignMerge > Preferences). The Document DDF feature has been designed to allow you to choose whether a document will use the DDF settings that are stored in the document or the DDF settings that are stored on your system. 

When this preference is selected (checked), DesignMerge will always use the DDF settings that have been stored inside a document file. In other words, every time you display a document in InDesign, DesignMerge will automatically switch its Current DDF settings to match the version of the DDF that is stored within the document. Additionally, you will not be able to use the Data Source Definitions (DDF) dialog to select a different DDF or to create a new DDF. However, you can still edit the document's DDF. Any changes that you make will be made solely to the copy of the DDF that is stored inside that document. Note the changes will not apply to the settings that are stored inside any other document.

When this preference is deselected (unchecked), you can still choose to select the Document DDF as the Current DDF of a document. However, DesignMerge will additionally allow you to create and apply DDFs that are stored on your system. If you edit one of these named DDFs, the changes will be applied to the DDF that is stored on your system, and when you open any document that uses this named DDF, the document will automatically use the new settings. Additionally, DesignMerge will store a copy of this DDF inside the document file in case you need to recreate it or would like to switch the document to using the Document DDF. 

IF YOU SEE AN ERROR MESSAGE when you try to select a DDF, edit a DDF, rename a DDF, or create a new DDF, then one of your DDFs may have become corrupt, or your installation of DesignMerge is unable to access or write internal configuration information on your system. For assistance in repairing your installation, contact Meadows Technical Support.