During our POC we saw the system databases(model,msdb and tempdb) lying outside the system databases group.
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1Are you sure it's a Managed Instance? Some flavors of Azure SQL don't include the typical system databases. See stackoverflow.com/questions/46100806/…. (But that would mean someone created model, msdb, and tempdb as user databases, which would be very strange.) – Doug Deden Mar 13 '19 at 14:48
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Just had to use latest SSMS..we were using previous versions with azure db and expected it would be fine..then this happened and we are fine now. Lesson learned. – Ramakant Dadhichi Mar 13 '19 at 15:04
It was just because of the SSMS version. https://stackoverflow.com/questions/54695590/create-database-using-ssms-gui-fails-for-azure-sql-managed-instance
Used 17.9.1 and can see things lined up properly. Probably the previous version was treating as Azure database.