I wondered about this also.  If your templates are specified in the CSV file, you technically won’t ever need to use that template selection, but the way the dialog is built, it still expects one to be selected. (Damon can correct me on this next part) — if for some reason, the PSD specified in the CSV can’t be found, I believe it uses this as a fallback.

Short answer: Pick something anyways, even if it’s a dummy PSD just to make this dialog go green.