This is 100% reproducible for me under KDS 3.0. If I delete the Generated_Code folder and then click "Generate Processor Expert Code" (for example, if I want to clean up a project because I have removed many components), Processor Expert will create the Generated_Code folder and the SDK sub folder and the operation completes, but it will not create the other source files, like Cpu.h, Cpu.cpp, etc.
Anyone else having this problem? If I delete only the contents of the Generated_Code folder, it usually hangs when I click the generate code button. If it hangs on the writing files step, after closing KDS, the files referenced above appear.