I recently switched from SU Make 2016 to 2017. I had my 2016 workspace set up with a Materials tray that had two sections. The top was standard SU materials, and the bottom was my customs materials library:
To get the secondary pane displayed, click on the little button below the two Xs in the top right corner. In your screen shot it shows with a - and an up arrow. Without the secondary pane displayed it’ll show a + and a down arrow.
As for your custom materials, where did you put them for SU2016?