Bug 97167 wrong proposals for linked folder in New Java Project>Link Additional Resource
org.eclipse.jdt.ui/ui/org/eclipse/jdt/internal/ui/wizards/buildpaths/newsourcepage/LinkFolderDialog.java
if (locationStatus.matches(IStatus.ERROR))
				return locationStatus;
			
			String resolvedLinkTarget= resolveVariable();
			path= new Path(resolvedLinkTarget);
			File linkTargetFile= new Path(resolvedLinkTarget).toFile();
			if (linkTargetFile.exists()) {
				IStatus fileTypeStatus= validateFileType(linkTargetFile);
				if (!fileTypeStatus.isOK())
					return fileTypeStatus;
			} else
				if (locationStatus.isOK()) {
					
					return new StatusInfo(IStatus.ERROR, NewWizardMessages.NewFolderDialog_linkTargetNonExistent); 
				}
			if (locationStatus.isOK()) {
				return new StatusInfo();
			}
			return new StatusInfo(locationStatus.getSeverity(), locationStatus.getMessage());
		}
        
        /**
         * Validates the type of the given file against the link type specified
         * in the constructor.
         * 
         * @param linkTargetFile file to validate
         * @return IStatus indicating the validation result. IStatus.OK if the 
         *  given file is valid.
         */
        private IStatus validateFileType(File linkTargetFile) {