URI and location

Ok, XML is not my strong point. So I have a few questions on setting IDEA up to validate an XML file.

I have created a DTD to validate a XML file, using DTDGenerate. Now when using <!DOCTYPE dataset SYSTEM "nms.dtd"> nms.dtd is marked red.
In Options --> IDE settings --> Resources I have added the location of the DTD. I suppose I should leave empty the URI since I created the DTD myself.

So what is wrong?
And is both URI and location in Resources mandatory?

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