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The other day, I was experimenting with adding creatures to a town and noticed that the upgraded creature in the recruitment window occupies the first or second slot, based on how it was defined in the upgrades of its base creature.
In other words, if you go to the game mechanics folder, find the peasants file, and in the upgrades section, swap the creatures around, they will also swap places in the recruitment window.
Moreover, the order of the creature that is listed as the base creature in the upgrades is important.
For example, in that test case with three levels of upgrades that I posted, peasants upgrade to archers, and their archers upgrade to improved goblins. The goblins still reference the original base creature. Therefore, they are displayed correctly in the recruitment window.
However, the way the peasants' upgrades reference the improved goblins affects the order in which the creatures will appear in the retraining window.