Are you using Actively Managed Mode (AMM) or External Management Mode (EMM)?

There are some issues with connecting to DM in EMM.  However, connecting to DM with AMM should work.  But please NOTE: Once you change to AMM, you cannot go back to EMM.

You can do the following for AMM:

1. Create your sandbox projects  normally at https://jazz.net/sandbox01/setup/web
2. Open your DM project and go to your project area.
2.1. Click on the Design Domain (left-side menu)
2.2. Select "Actively managed with Design Manager"
2.3. In the Domains section, click on Associate... and select all domains (Add All>>)
2.4. In Properties, select (check-box) all of the properties
2.5. Save the project.

3. Start Rhapsody
4. Open your model project
5. Select Tools > Design Manager > Move Model to Design Manager
5.  Set the following  (you will be prompted to log into the DM server):
      Server: https://jazz.net/sandbox01-dm
      Project Area: <select your DM project area>
      Configuration Type: Design Manager Configuration
      Stream: Type '' (asterisk character) and click on the magnifying glass icon.
6. Select the stream and click on Next.
7. You should see a message, "All checks successfully passed." Click Finish.
    "Move to Design Manager" popup will appear with progress. 
8. Another message will pop up -- Model <your model> was successfully moved to Design Manager server. Rhapsody will reload the model."   Click OK.

You can now make changes to your model in Rhapsody.  To sychronize changes in Rhapsody with Design Manager, you can just save the model (File > Save).

 
Global Configurations:  For step 5, select Global Configuration if you plan on linking design elements (relationships)  with DOORS Next Gen or Quality Manager, you should do the following before Step 3 (Start Rhapsody):
1. Go to Global Configuration: https://jazz.net/sandbox01-gc/web
2. Open your GC project if it's not already opened.
3. Cick on "Create and browse components"
4. Click on the component that was created for you.
5. Click on the stream that was created for you.
6. Click on "+Add Configuration"
6.1. Select Design Management.
           Project Area: <select your DM project area">   (You can type in your project name and it will auto-fill)
           Stream: Type   (asterisk) to view your stream.
       Select the DM stream created for you. Then click OK.
7. Click on "+Add Configuration"
7.1. Select Requirements Management
           Project Area: <select your RM project area">   (Auto-fill is not enable. You can click on arrow and use the mouse wheel to scroll.)
           Stream: Type   (asterisk) to view your stream.
      Select the RM stream created for you. Then click OK.
8. Click on "+Add Configuration"
8.1. Select Quality Management
            Project Area: <select your QM project area">   (You can type in your project name and it will auto-fill)
            Stream: Type   (asterisk) to view your stream.
      Select the QM component (stream) created for you. Then click OK.

In Rhapsody, when you then select Tools > Design Manager > Move to Design Manager, you can select Global Configuration and select your global configuration stream.