system.h is not locatable even after compiling the project

I never tried this option before, and it doesn't work on my system either. There is a warning saying it's experimental though ;)

Just build the full project, it will only recompile modified files anyway.

For the .h files, it is sometimes a real pain to find them in the IDE. You often need to find them by hand from the project explorer on your left.

For system.h, go in your project's syslib, Debug, system_description

For the altera component include files, go in altera.components, IP Device Drivers, sopc_builder_ip, your_component_name, inc

Other general include files, such as alt_types.h, are in altera.components, IP Device Drivers, nios2_ip, altera_nios2, HAL. inc