Actually, the change on their side makes a lot of sense. The fact that every SourceSet is now its own module means that IntelliJ can finally understand the dependencies of different configurations correctly.
For example, we have test dependencies between different submodules. When the tests of subproject B depend on the tests of subproject A, IntelliJ now finally understands that and adds the test dependencies of subproject A as test dependencies of subproject B. Getting IntelliJ to grasp that required ugly XML hacks in the past. (Set exported=true for all dependencies, which means that IntelliJ will now also erroneously think that the test dependencies of A are dependencies of the main sources of B.)
We also have cases where the tests of subproject A depend on the main sources of subproject B, which in turn depend on the main sources of subproject A. IntelliJ always thought that this was a circular dependency and couldn’t be convinced that this is actually OK.
Especially large, complicated projects like ours benefit a lot from that change and it makes a lot more sense than the previous behavior. OTOH, it means that the integration is now broken. Which is why I both filed a bug in the IntelliJ bug tracker and started a thread here: Both sides need to work on this.
It didn’t when I tested. Did you remove the old .idea directory and all *.iml files and re-import the Gradle project?