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What is the point of the Project field in the Defects area?
You log in to a project, so how can you then select a project when creating a defect?
That implies that the project you logged in as is irrelevant because you can allocate a defect to any project.
It also implies that you can see defects in all projects, so what is the point in logging in to a particular project?
You have this field confused. Project is relative to the items you put in the list (ALL Projects) assigned to the project field. It's not a field of TestDirector projects.
It is just another field which you can use to track. You can also have user defined fields for modules, sub modules etc