The source and target database steps allow you to specify the SQL Server databases that you want to compare. For more detail about the database connection settings, see Adding SQL Server databases.
When you open an existing config file, the wizard performs a thorough validation of that file. If the xml file is correct, you will see a green check mark to the left of the filename. If the xml file is incorrect, depending on the severity of the problem, the wizard could generate warnings or reject the file entirely.