The model 'ApplicationFoundation. Model X' belongs to the package 'ApplicationFoundation' that is blocked from customization. You cannot have more than one model in this package

I’m doing code upgrade from Ax 2012 r3 to D365 7.3 using LCS tool

I got CodeMergeSolution in VSTS project. Where I can find one workflow related changed which i did in workflow class in AX 2012 R3. When I merge and Build the Application Foundation Im receiveing the following error.

The model ‘ApplicationFoundation. Model X’ belongs to the package ‘ApplicationFoundation’ that is blocked from customization. You cannot have more than one model in this package

This Model X is comes from ISV

You aren’t allowed to modify Application Foundation package; you must move the code to extensions.
But if it’s ISV code, I wonder why you’re upgrading it at all. Shouldn’t you get an upgraded solution from the ISV?

We are ISV. its our solution. In this code upgrade we are upgrading only our Custom Model which is available in ISV layer on AX 2012 R3. Currently in our dev system there is only one Model in ISV on ax 2012 R3.

as you mentioned to move the code to extension. Are you telling me to create one new Model then select existing package as Application Foundation Package. ?

All right, so it’s your work to learn how AX 7 works, what are extensions etc. and refactor your solution so it doesn’t try to use overlayering in any hard-sealed packages.

Stop trying to add models to Application Foundation. As the error message explicitly told you, it’s not allowed.

Shall I create one new Package called X with Refernce of ApplicationFoundation then, Create a new model with Reference of X Package which i Create in first step. Is this the right way ?

No, you can’t create a package without any models.
If you don’t already have any suitable model, create a new one and choose that you want to create it in a new package.

Also you do suggest me to delete the ApplicationFoundation. Model X from Application Foundation Package ?

Go to the packages folder, find ApplicationFoundation package, delete the folder with your model from there and then the descriptor file for the model from Descriptor folder.
Just make sure that all code you want to keep has been migrated before you delete the model.