Thank you for contacting us.
This issue should be fixed in the SP scheduled for the middle of March.
Actually, the problem appears when you try to set master page for already existing template (Actions
menu > Base Template
> Use you own .master file
So, currently the workaround is to set the required master page when creating the template:
1. Click Create a template
2. Fill the Name
and choose Use template
3. Click Select another Template
4. Click Use you own .master file
5. Select the master page
the Telerik team