it's not satisfying when one feels like a manual index service.
This question is not as lazy as it sounds. And simply reading the manual doesn't fully explain it without seeing it first-hand.
The concept of needing to be nested in an Event doesn't exactly stand out, esp to new users. Since you right-click on Events and the only option is for global variables, you don't even see 'Add Local Variable' grayed out or anything. Not until you right-click on a nested Event do you see the option for adding a local variable. The manual suggests that you see the option to add a local or global whenever you right-click. I think it's a UI flaw as you should probably see 'Add Local Variable' wherever you see global, but grayed it out where it's in violation.
I remember this one stumping me a bit. It was not that straight forward, and hopefully this thread helps someone in the future.