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When creating a new address locator and defining the reference data, Smart Data Compression or SDC Feature Datasets do not appear in the 'Choose Reference Data' dialog box.
In order to create an Address Locator, an index file must be saved with the reference data. SDC Datasets, such as those distributed with the ESRI Data and Maps, are read-only. Therefore, the streets.sdc file cannot be the reference data in an Address Locator.
Convert the SDC Feature Class to a shapefile or personal geodatabase feature class. See the link in the Related Information section below for more information.