The Color selection panel is part of Fancy Product Designer Plus Add-On.
First of all you have to define the main element in the product options in order to use the color selection panel. Go to Fancy Products and click on the icon to edit the product options. There you will find an input field to define the main element, just enter the title of the element that you set via the Product Builder.
After that you need to define the placement of the color selection panel via the Plus tab in the global or individual product settings.