First you should be aware that these form settings are User settings.  You must be logged in as each user to make the appropriate change.  Just changing it under your User name will not change it for someone else.  The logic here is that different users can use different forms (eg. first invoice done by Bob, then Jane does collections and sends out an invoice that indicates Overdue on it).

This Overdue invoice is a User-Defined invoice because someone had to edit it and put in the word "Overdue".  The only way to select an already created form, is to change the Description Invoice to User-defined form.

The Invoice template you have selected right now is a canned template and cannot be edited, but you can click Customise Form and modify it, then when you save it, the Description word Invoice will be changed automatically to User-defined form.  Or just change the word invoice yourself and the Browse button will be activated.

This was very useful. 

thank you Richard. hoping for more helps in future.