Made some adjustments in the settings on the test group:
After looking at the test instrument, variable and default outcome, as shown below, I got a new error: “Test value determination invalid for option test types”

This is because on sequence two, where the Test is of type “Option” , there is a mathematical function being assigned to it. Test value determination = “Average” . You cannot perform a mathematical operation on an option, and the value has to be set to “Manual”. Once that was done, the error / warning ceased.

Finally, there is a field named “Default Outcome” that is not immediately visible. You must specify the default outcome of the test.