Linked objects are deprecated - they are now read only, but they should still work. However, editing the paths in dprj files isn't possible in Monarch Utility anymore. My advice would be to a) fix the reference in Utility while it's still an xprj, then convert the file to dprj. To what extent does your workflow depend on linked objects? There are things on the roadmap that might be helpful.
Further to Olly's answer;
Reading between the lines here it may be that the V12 installation has replaced the default offering for User Defined Functions - the file referenced in your post - with the same file but a dmod suffix.
So the next question is - have you ever used any of the 'Standard' User Defined Functions that came with the original xmod? Have you aver added any of your own?
If YES to the first question and NO to the second the chances are that you just need to change the connection to the dmod version of the file and then save the project, thus updating the reference and pointing to the newly named version. The "Missing File" grid allows you to click on the boxes in the right hand row and then navigate to the file you need , click it and so provide the new information ready for saving the model/project.
If you have your own modified version of the 'standard' UDF model I think the best thing to do would be to convert that and replace the standard file installed with the upgrade. (Youo may want to rename the standard file and set it aside somewhere safe first - just in case you want it again in the future!)
The easiest way I can think of to convert your file from an xmod to a dmod would be to open a Modeler session, open your original version of the UserDefinedFunctions.xmod file and then save it to give you the dmod version. As with other recent versions of Monarch you don't need to open a report or database or anything to do that.
I may have missed something in the need here but I think this is the right starting point. Then we can see what happens.