Bug 13034 Cannot create a Source Folder in a new Java Project
build 20020404 If you try and create a Source Folder in a Java Project you have just created you get an error preventing you from hitting finish. STEPS 1) Create Java Project Foo 2) Open New->Source Folder 3) Enter Bar as the name - you will get "Cannot nest entry Bar inside entry Foo/Bar" 4) Create a folder Bar. 5) Add it as a source folder in the Properties Dialog for Foo. No problem.
org.eclipse.jdt.ui/ui/org/eclipse/jdt/internal/ui/wizards/NewSourceFolderWizardPage.java
IResource res= fWorkspaceRoot.findMember(path);
				if (res != null) {
					if (res.getType() != IResource.FOLDER) {
						fRootStatus.setError(NewWizardMessages.getString("NewSourceFolderWizardPage.error.NotAFolder")); 
						return;
					}
				}
				IClasspathEntry[] newEntries= new IClasspathEntry[fEntries.length + 1];
				for (int i= 0; i < fEntries.length; i++) {
					IClasspathEntry curr= fEntries[i];
					if (curr.getEntryKind() == IClasspathEntry.CPE_SOURCE) {
						if (path.equals(curr.getPath())) {
							fRootStatus.setError(NewWizardMessages.getString("NewSourceFolderWizardPage.error.AlreadyExisting")); 
							return;
						}
					}
					newEntries[i]= curr;
				}
				newEntries[fEntries.length]= JavaCore.newSourceEntry(path);
								
				IStatus status= JavaConventions.validateClasspath(fCurrJProject, newEntries, fOutputLocation);
				if (!status.isOK()) {
					fRootStatus.setError(status.getMessage());
					return;
				}
				fRootStatus.setOK();
			}
		}
	}