It is apparent that the errors originate from outside the model.
This is a perfectly valid sentence.
Contrary to the traditional grammar, according to the modern grammar a preposition can take a wide range of grammatical structures as complement. For example:
1. It hasn't been [until recently] that they have had to put on their big boy pants and actually go after him. [AdvP as complement]
2. [From behind the cloud] appeared the moon.* [PP as complement]
3. Please drop the garbage [into the dustbin]. [NP as complement]
4. They took me [for dead]. [AdjP as complement]
5. They are the experts [on whether their lives are worth living]. [Embedded interrogative clause as complement]
6. He left [before the meeting ended]. [Clause as complement]
Though not all prepositions can license all the grammatical structures listed above. For example the preposition "from" can't take any AdvP, but another preposition — "until" — can.
* [Traditional grammar will call it the occurrence of double preposition. According to the traditional grammar a noun or a noun phrase can sit in the complement position of a preposition. But what about until recently? I have grown up reading traditional grammar, but I haven't found any satisfactory explanation for until recently. So I readily accepted the explanation of Modern Grammar.]
So in your quoted sentence from outside the model is a PP, where from is the head preposition, and it takes another PP — outside the model — as complement. In outside the model, the head preposition is outside, and the complement is a NP — the model.
Why is outside in outside the model not a noun?
There are examples of nouns that can act like an adjective as in ice cream etc; they are known as noun adjuncts. In the order of adjectives such adjectives sit exactly before the head noun. In the NP structure the order is Determiner + Adjective + head noun. No other ordering is possible. In outside the model, if we consider outside as noun, the structure is incorrect as the central determiner — the — is placed in the middle of that NP structure.
Why is outside in outside the model not an adjective?
Consider the following sentence:
Unaware of the consequences, John made this decision.
Here unaware the consequence is an AdjP, and it predicates the noun — John. As it's an AdjP it needs an NP to predicate upon. Hence the following sentence is incorrect:
!Unaware of the consequence, there was the decisions that was made. (INCORRECT)
Now see this:
Outside the model, there is no existence of the theory.
This makes a valid sentence, and the phrase outside the model does not need an NP to predicate on. So it's clear that it's not an AdjP. In your sentence also it is not hinged to any NP.
Why is outside in outside the model not an adverb, but a preposition?
outside here takes NP as complement, and that confirms that it's not an adverb, but a preposition.