Android Studio 3.5 new update was released by Google on August 20 2019, this release has some major changes because of that you are seeing this error.
As a work around please uninstall Android Studio 3.5 and install old Android Studio(3.4.2) from the following location,
After installation of Android Studio, please run the hardware setup again. Let us know if you face any issue.
Note: Please don't update Android Studio but you can update SDK Tools