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/buildpaths/BuildPathsBlock.java
if (entryKind == IClasspathEntry.CPE_LIBRARY) {
						isMissing= !resolvedPath.toFile().isFile(); 
						if (!ArchiveFileFilter.isArchivePath(resolvedPath)) {
							if (fWorkspaceRoot.getWorkspace().validatePath(resolvedPath.toString(), IResource.FOLDER).isOK()) {
								res= fWorkspaceRoot.getFolder(resolvedPath);
							}
						}
					} else if (entryKind == IClasspathEntry.CPE_SOURCE) {
						isMissing= true;
						if (fWorkspaceRoot.getWorkspace().validatePath(resolvedPath.toString(), IResource.FOLDER).isOK()) {
							res= fWorkspaceRoot.getFolder(resolvedPath);
						}
					}
				}
											
				CPListElement elem= new CPListElement(entryKind, path, res, curr.getSourceAttachmentPath(), curr.getSourceAttachmentRootPath(), isExported);
				if (projectExists) {
					elem.setIsMissing(isMissing);
				}
				newClassPath.add(elem);
			}
		}
		List exportedEntries = new ArrayList();
		for (int i= 0; i < newClassPath.size(); i++) {
			CPListElement curr= (CPListElement) newClassPath.get(i);
			if (curr.isExported() || curr.getEntryKind() == IClasspathEntry.CPE_SOURCE) {
				exportedEntries.add(curr);
			}
		}