The SourceSet 'instrumentTest' is not recognized by the Android Gradle Plugin

instrumentTest has been deprecated and does not work with modern Gradle versions - which you probably updated in your project when upgrading Android Studio.

Replace instrumentTest with androidTest and it'll work.

Replace instrumentTest by androidTest as example below

android {
    buildToolsVersion "27.0.3"
    compileSdkVersion 24
    sourceSets {
        main {
            manifest.srcFile 'AndroidManifest.xml'
            java.srcDirs = ['src']
            aidl.srcDirs = ['src']
            renderscript.srcDirs = ['src']
            res.srcDirs = ['res']
            assets.srcDirs = ['assets']
            jniLibs.srcDirs = ['libs']
        }

        androidTest.setRoot('tests')
    }
}