It is critical that this operation is performed before you start using the Nav Data Tool! Also make sure no Flight Sim or associated software is running as it will slow down the process.
This option is available under the DATABASE menu option.
It scans the flight simulation directory defined in SETTINGS to identify the specific scenery you have installed so that you can use the Nav Data Tool with it.
It will take several minutes to complete once started.
If an error occurs you may need to run the Nav Data Tool "As Administrator".
Note that this option also runs the Sim Scenery Area Update automatically.
In future, whenever you add scenery you should run this option again.