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The problem is related to the syntax used. The difference between data-source and data-bind="source: is that the first one is configuration option written via data-attribute, while the second is source binding
data-source="theList" will search for global variable called theList which should reference to a DataSource instance.
data-bind="source: theList" will search for MVVM field which contains DataSource instance.
To illustrate this I prepared a small sample: http://jsbin.com/orapaq/2/edit
In your particular case you should use data-bind="source: theList" because "theList" is part of the ViewModel. For more information please check the source binding article:
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