Unless you have a good reason to use Plugin SDK in Liferay 7, you should use Liferay Workspace (or maven or gradle). Plugin SDK is basically only for upgrading legacy plugins, but new work is better documented and more flexible in the new OSGi modules.
As you state that your Plugin SDK is version 7, you're probably not upgrading. Instead of fixing your issue, simply ignore the SDK. If you want to fix it: Just like the previous versions' Plugin SDKs you'll need to configure the location of Liferay in build.yourusername.properties in the root folder of the SDK. (replace yourusername with the actual name that you're using to login to your development machine). The configuration you need is stated in the dialog.