CrystalReport1 is an rpt that is embedded in my VB
.net project - so i created it by choosing 'add new item' and then selecting 'crystal report'.
I then added another new item - an Xml schema - in the same way. Once the schema is created, right click on it and select add, new element. This is a data table so fill it with column names and data types that you need.
Then attach this data table to your report so that you can do the design work.
Hope this helps