Why doesn't Qsys generate my simulation files, after I have drilled into a subsystem?

Due to a problem in the Quartus® Prime Pro software version 16.0 and later, when selecting a nested Qsys subsystem module using the ‘Drill into Subsystem’ command,  generation of HDL or simulation files for that subsystem module does not work. This problem is caused by the module not being passed correctly as an argument.

To work around this issue, you can generate from the top level Qsys file or on the command line. One other work around is to open the subsystem’s Qsys file directly and then generate the necessary testbench files.

This problem is scheduled to be fixed is a future version of the Quartus® Prime software.