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The drop-down menus are inconsistent between K2 Designer for Visual Studio and K2 Disigner for Visio.
When using K2 Designer for Visual Studio the environment selection feature is contained within a separate sub menu. In K2 Designer for Visio however, the environment selection feature is part of a consolidated drop-down along with other system features.
In the image below, from K2 Designer for Visual Studio the Environment Selection drop-down is visable as a separate menu with related options. [Figure 1. K2 Designer for Visual Studio]
In the image below, from K2 Designer for Viso the Environment Selection drop-down is visable as a consolidated menu with a number of unrelated selections in the menu. [Figure 2. K2 Designer for Visio]
This Hotfix is contained within the latest K2 blackpearl 0807 Update. Install the update package to resolve the error.
The latest K2 blackpearl 0807 Update is available as an independent installation package which can be found here: https://portal.k2.com/downloads/bp/default.aspx