Another Newbie Question

I've been reading all the threads I can find on creating scenery objects for object library creator & found it useful. I'm still confused about locating the necessary files to compile in Object library creator and the path to store them. I'm using FSDS 3.5.1 and compiling bgl files for FSX. This is fine for fixed location objects, and they show up where I place them in FSX. The recommended compiler for FSX is XtoMdl, and the finished result ends up in the add on scenery folder as a BGL. I don't know if there is a phantom mdl file and can't locate it. From what I've read, Object library creator needs mdl files to compile, and if what I've read is correct, a folder for the library objects should be created in the FSX add on scenery folder. There is a choice in FSDS to compile using MakeMdl. Should I use this compiler to create the mdl file and set the path to the library created in Object library creator? And when compiling for FSX do I set a path to a folder in FSX addon scenery?