Error creating virtual device in Android Studio

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Yesterday, I installed Android Studio's latest version on Ubuntu. Everything ran fine, until I ran the "Hello World!" program. It asked me to create a virtual device. While creating the device, it shows me an error that the AVD manager cannot find a system image. This makes no sense since I have already installed the latest SDK (API level 25, Android 7.1.1). I downloaded the system image from the AVD manager itself, but to no avail. Can someone help me sort the damn thing out? I switched from Windows to Linux due to the plethora of problems with Android Studio on Windows. But the thing's bugging once again. Here is a screen shot:

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