This happened to me twice, and both of them were straight forward problems.
It will only recognise the file if you save it as an xml, not a txt document, which notepad will do automotically. This is fixed by simply putting .xml on the end of the filename.
Secondly, did you save it in 'copy of included systems' or something like that? Those are just backups of the system files and not the ones loaded by Universe Sandbox. The real directory is a strange one, so the easiest way to get to it is using the 2nd icon the that U.S should have placed on your desktop, and a systems folder is located in that. That's where you need to save it. Hope that helped.