This will happen if the Vivado project directory path contains a space (e.g. "New Folder"). Vivado allows spaces in project and directory paths, but XPS does not support spaces. Vivado does not correctly catch the use of spaces when an XPS source is added to a project and fails to prevent the integration issue. With Vivado 2012.4 and EDK 14.3, the following error is listed in the Tcl console, but may be easily overlooked:
ERROR:EDK - Path with spaces is not supported in XPS. Please choose a path with
no spaces
Until XPS can correctly handle spaces, Vivado projects containing XPS sources should be moved to a directory with no spaces.