That icon opens browser and you can choose and place image as decal on your object. If you generating backround image or 3D model to image that icon activating "Match Image".
It seems I catch your problem. If you are generating backgraound or "3D Model to Image" do not pick your model as guide object. If you pick it, you need to use Undo as it looks like transparent. Do not pick it up and you will be able to continiue your work with object.
Another workaround is to save document before generating and than "revet to saved" from saved command
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