Hi @AyanPalit, thanks for the reply.
I have specified the name of the FGDB in the Create File Geodatabase tool (which is Test.gdb).
Selecting this Test.gdb in the Create Indoors Database tool is what shows the error I screen grabbed above saying:
'Error 000110 C:\Data\Projects\XXX\XXX\Test.gdb does not exist'
I know the target geodatabase (Test.gdb) doesn't exist, but it will by the time the Create Indoors Database tool runs. I just want to use the database created from the Create File Geodatabase tool as the input to the Create Indoors Database tool. What am I doing wrong?