### Eclipse Workspace Patch 1.0
#P org.eclipse.jdt.core
Index: model/org/eclipse/jdt/internal/core/builder/ClasspathDirectory.java
===================================================================
RCS file: /cvsroot/eclipse/org.eclipse.jdt.core/model/org/eclipse/jdt/internal/core/builder/ClasspathDirectory.java,v
retrieving revision 1.38
diff -u -r1.38 ClasspathDirectory.java
--- model/org/eclipse/jdt/internal/core/builder/ClasspathDirectory.java	7 Mar 2009 01:08:10 -0000	1.38
+++ model/org/eclipse/jdt/internal/core/builder/ClasspathDirectory.java	25 Mar 2009 20:45:17 -0000
@@ -33,7 +33,7 @@
 
 ClasspathDirectory(IContainer binaryFolder, boolean isOutputFolder, AccessRuleSet accessRuleSet) {
 	this.binaryFolder = binaryFolder;
-	this.isOutputFolder = isOutputFolder;
+	this.isOutputFolder = isOutputFolder || binaryFolder.getProjectRelativePath().isEmpty(); // if binaryFolder == project, then treat it as an outputFolder
 	this.directoryCache = new SimpleLookupTable(5);
 	this.accessRuleSet = accessRuleSet;
 }
#P org.eclipse.jdt.core.tests.builder
Index: src/org/eclipse/jdt/core/tests/builder/EfficiencyTests.java
===================================================================
RCS file: /cvsroot/eclipse/org.eclipse.jdt.core.tests.builder/src/org/eclipse/jdt/core/tests/builder/EfficiencyTests.java,v
retrieving revision 1.14
diff -u -r1.14 EfficiencyTests.java
--- src/org/eclipse/jdt/core/tests/builder/EfficiencyTests.java	27 Jun 2008 16:02:02 -0000	1.14
+++ src/org/eclipse/jdt/core/tests/builder/EfficiencyTests.java	25 Mar 2009 20:45:18 -0000
@@ -27,6 +27,37 @@
 		return buildTestSuite(EfficiencyTests.class);
 	}
 
+	public void testProjectAsClassFolder() throws JavaModelException {
+		IPath projectPath1 = env.addProject("Project1"); //$NON-NLS-1$
+		env.addExternalJars(projectPath1, Util.getJavaClassLibs());
+
+		IPath projectPath2 = env.addProject("Project2"); //$NON-NLS-1$
+		env.addExternalJars(projectPath2, Util.getJavaClassLibs());
+		env.addClassFolder(projectPath2, projectPath1, false);
+
+		env.addClass(projectPath2, "p1", "X", //$NON-NLS-1$ //$NON-NLS-2$
+			"package p1;\n"+ //$NON-NLS-1$
+			"public abstract class X {}\n" //$NON-NLS-1$
+		);
+
+		env.addClass(projectPath2, "p2", "Y", //$NON-NLS-1$ //$NON-NLS-2$
+			"package p2;\n"+ //$NON-NLS-1$
+			"public class Y {}\n" //$NON-NLS-1$
+		);
+
+		fullBuild();
+
+		env.addClass(projectPath2, "p1", "X", //$NON-NLS-1$ //$NON-NLS-2$
+			"package p1;\n"+ //$NON-NLS-1$
+			"public class X {}\n" //$NON-NLS-1$
+		);
+
+		incrementalBuild(projectPath2);
+
+		// if a full build happens instead of an incremental, then both types will be recompiled
+		expectingCompiledClasses(new String[]{"p1.X"}); //$NON-NLS-1$
+	}
+
 	public void testEfficiency() throws JavaModelException {
 		IPath projectPath = env.addProject("Project"); //$NON-NLS-1$
 		env.addExternalJars(projectPath, Util.getJavaClassLibs());