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[HDRP + Nested prefabs] Cannot drag/drop to create a prefab anymore

Scene Management


I was unable to drag/drop prefabs into my project window from scene view (with this certain project only) like before.

1. Download the fontain demo from here:
2. Open the Sample forest scene
3. Try to drag and create a prefab group from "Rocks" parent object
4. Notice it will try and do something, but nothing will happen
5. Right click the asset and convert it to a prefab.
6. This will create a prefab however any objects with the HD Lit material will lose their materials - Layered Lit was okay.
7. restart the project to see the materials restored.

Image A:
Image B:

See doc for more gifs:

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