Hi Sunil,
I've had a similar issue with the drop down not allowing me to select the agent after an HCI upgrade. Upgrading the on premise agent to the latest release fixed it then. As a first step you could check if the agent is green and up to date in the Administration tab. If it's not, ask to basis team to check the installation again.
Also try to create a datastore of type File and see if you are able to select the agent. This will give you an idea if the issues in on ECC side or HCI agent.
Best regards,
Cosmin