I... don't quite know what's wrong, and I can't open the World Editor right now to screenshot examples for you...
Nothing we're doing here has any bearing on or from the filepath of your system (i.e. where your installation of Wc3 or the World Editor or the resource itself is). Normally, if you ever import a custom model it shows up in the Import Manager with a "filepath" specific for that map. Like "war3mapimported/CustomModelName.mdx".
If you try to assign that custom model to placed unit, it will give you an error & produce a green-and-black-checkered box: this doesn't work.
To make any custom model work,
you need to save & close down the map you are working on, then re-open it & assign the custom model to the placed unit; it should work then //is what I believed & did for the last
decade or so of modding... But
apparently (thanks to
@Retera ), all you need to do is
Save the map you are working on. After that, assign the custom model to the placed unit & everything should look fine.
The Exception to this is..... with custom models that require a Custom Texture (rather than being entirely in-game Textured).
Then you must also Import the custom Texture alongside the custom model. You must then assign the correct file-path to the Custom Texture (usually a minimum of removing "war3mapimported/"). If you don't know the file-path of the Texture, open the Custom Model in Magos, open the 'Texture Editor', and all the Textures it uses & their paths will be right there. Many times it's simply "Textures/CustomTextureName.blp", which is all you need to change it to in the World Editor's Import Editor.