Thank you Kenshow-san,
I have tried method 1 and 2. Only method 2 works for me.
For some reason, method 1 throws multiple errors that I can't figure out why. I based it off the USB_Audio project they cited. I'm still confused.
I love that the libraries are now shared to minimize disk space and archive size when sharing projects with others. However, it is my opinion that the design.modus content by its very nature is NOT a shareable library resource.
At a minimum, the design.modus file should placed in the shared space ONLY as a template. When the Library manager links the shared libraries to the project, it should copy the design.modus file from the shared location to the project/BSP directory ONLY if there is no design.modus already there for the project/BSP.
This would allow the BSP template design.modus to be used on a "fresh"/new project. It can then be modified by the user for the application intended.
However if the project was loaded/imported and the design.modus file was already configured, this would be the design-intended file to use because it was previously tailored to the application imported. Having the other BSP resources from a shared space (if possible) would help to minimize disk space.
In summary, there are certain contents of a project/BSP that are unique to the application. I believe the design.modus is one of them. This would be the approximate equivalent to the TopDesign file in PSoC Creator. This needs to be preserved and addressable at the project/BSP level.