If after drag/dropping an image file into xcode image set well: there's a yellow triangle with a white exclamation and that has the warning message of the form: The image set references a file ".." , but that file does not have a valid extension. Then I found if I change to all lower caps (.png vs .PNG) the warning goes away.
soapbox: come on xcode, you can do better a UI than that....at least provide examples of what should work...