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I have one basic question , when you create custom model using model builder in ArcGIS. It should be used with ArcMap or ArcCatalog? Reason I am asking this question is I have created a model and I am setting it "Store relative path names" and I have defined a directory structure for the same. Now the problem is in ArcMap when you right click on "ToolBox" it will allow you to add toolbox and you can select your tool from the specific location whereas in ArcCatalog it creates Tool (.tbx) at C:\Users\\AppData\Roaming\ESRI\Desktop10.0\ArcToolbox\My Toolboxes folder. Where I am not able to access the relative scripts because I will not have any absolute path and it should not be absolute.

Also can someone share the difference between ArcMap and ArcCatalog?

Any idea or suggestions on this?

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I don't understand the question. What aspect are you not clear on -- adding a toolbox or relative paths? The one has nothing to do with the other. Nor is there much difference between running a tool in ArcMap vs. ArcCatalog, unless you are working with the current map document/ToC. –  blah238 Apr 12 '13 at 23:00
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For the first part of your question, check out Paths explained: Absolute, relative, UNC, and URL for a detailed description of how to use paths within ModelBuilder.

To answer the second part of your question, the ESRI help page "What is ArcCatalog?" provides the following:

ArcCatalog is used to:

  • Organize your GIS contents
  • Manage geodatabase schemas
  • Search for and add content to ArcGIS applications
  • Document your contents
  • Manage GIS servers
  • Manage standards-based metadata

As an alternative to using ArcCatalog, you can open and work with theCatalog Window within ArcMap, ArcGlobe, and ArcScene in which all the same functions and tasks can be performed.

You can run models with either the stand-alone program ArcCatalog or with ArcMap. Make sure you create and use "Toolboxes" rather than "Python Toolboxes" for models. Also keep in mind that you do not have to store your models in the default "My Toolbox" location. You can create a toolbox anywhere to store your models. My personal preference is to run models from ArcMap, because I can quickly analyze output.

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