diff --git a/org.eclipse.jdt.core.tests.model/src/org/eclipse/jdt/core/tests/model/ClasspathTests.java b/org.eclipse.jdt.core.tests.model/src/org/eclipse/jdt/core/tests/model/ClasspathTests.java
index 4166cb2..47d2148 100644
--- a/org.eclipse.jdt.core.tests.model/src/org/eclipse/jdt/core/tests/model/ClasspathTests.java
+++ b/org.eclipse.jdt.core.tests.model/src/org/eclipse/jdt/core/tests/model/ClasspathTests.java
@@ -2018,8 +2018,10 @@
  * 33207 - Reject output folder that coincidate with distinct source folder
  */
 public void testClasspathValidation22() throws CoreException {
+	Hashtable options = JavaCore.getOptions();
 	try {
 		IJavaProject proj =  this.createJavaProject("P", new String[] {}, "");
+		proj.setOption(JavaCore.CORE_OUTPUT_LOCATION_OVERLAPPING_ANOTHER_SOURCE, JavaCore.ERROR);
 		IClasspathEntry[] originalCP = proj.getRawClasspath();
 
 		IClasspathEntry[] newCP = new IClasspathEntry[originalCP.length+2];
@@ -2033,6 +2035,7 @@
 			"Source folder \'src\' in project 'P' cannot output to distinct source folder \'src2\'",
 			status);
 	} finally {
+		JavaCore.setOptions(options);
 		this.deleteProject("P");
 	}
 }
@@ -2043,8 +2046,10 @@
  * default output scenarii is still tolerated
  */
 public void testClasspathValidation23() throws CoreException {
+	Hashtable options = JavaCore.getOptions();
 	try {
 		IJavaProject proj =  this.createJavaProject("P", new String[] {}, "");
+		proj.setOption(JavaCore.CORE_OUTPUT_LOCATION_OVERLAPPING_ANOTHER_SOURCE, JavaCore.IGNORE);
 		IClasspathEntry[] originalCP = proj.getRawClasspath();
 
 		IClasspathEntry[] newCP = new IClasspathEntry[originalCP.length+2];
@@ -2061,6 +2066,7 @@
 //			"Source folder 'P/src' cannot output to distinct source folder 'P/'.",
 //			status);
 	} finally {
+		JavaCore.setOptions(options);
 		this.deleteProject("P");
 	}
 }
@@ -2305,11 +2311,14 @@
 		newCP[originalCP.length] = JavaCore.newSourceEntry(new Path("/P/src1"), new IPath[]{new Path("src2/")}, new Path("/P/src1/src2"));
 		newCP[originalCP.length+1] = JavaCore.newSourceEntry(new Path("/P/src1/src2"));
 
-		IJavaModelStatus status = JavaConventions.validateClasspath(proj, newCP, proj.getOutputLocation());
+		proj.setRawClasspath(newCP, proj.getOutputLocation(), null);
 
-		assertStatus(
-			"Source folder \'src1\' in project 'P' cannot output to distinct source folder \'src1/src2\'",
-			status);
+		assertMarkers(
+			"Unexpected markers",
+			"Project \'P\' is missing required source folder: \'src1\'\n" + 
+			"Project \'P\' is missing required source folder: \'src1/src2\'\n" + 
+			"Source folder \'src1\' in project \'P\' cannot output to distinct source folder \'src1/src2\'",
+			proj);
 	} finally {
 		this.deleteProject("P");
 	}
diff --git a/org.eclipse.jdt.core/model/org/eclipse/jdt/core/IJavaModelMarker.java b/org.eclipse.jdt.core/model/org/eclipse/jdt/core/IJavaModelMarker.java
index dbc6e55..e25a8cb 100644
--- a/org.eclipse.jdt.core/model/org/eclipse/jdt/core/IJavaModelMarker.java
+++ b/org.eclipse.jdt.core/model/org/eclipse/jdt/core/IJavaModelMarker.java
@@ -1,5 +1,5 @@
 /*******************************************************************************
- * Copyright (c) 2000, 2010 IBM Corporation and others.
+ * Copyright (c) 2000, 2011 IBM Corporation and others.
  * All rights reserved. This program and the accompanying materials
  * are made available under the terms of the Eclipse Public License v1.0
  * which accompanies this distribution, and is available at
@@ -114,4 +114,13 @@
 	 * @since 2.0
 	 */
 	String CLASSPATH_FILE_FORMAT = "classpathFileFormat"; //$NON-NLS-1$
+	
+	/**
+	 * Output overlapping another source attribute (value <code>"outputOverlappingSource"</code).
+	 * Used only on buildpath problem markers. The value of this attribute is
+	 * either "true" or "false".
+	 * 
+	 * @since 3.8
+	 */
+	String OUTPUT_OVERLAPPING_SOURCE = "outputOverlappingSource"; //$NON-NLS-1$
 }
diff --git a/org.eclipse.jdt.core/model/org/eclipse/jdt/core/IJavaModelStatusConstants.java b/org.eclipse.jdt.core/model/org/eclipse/jdt/core/IJavaModelStatusConstants.java
index 4cc2f45..1fd2a84 100644
--- a/org.eclipse.jdt.core/model/org/eclipse/jdt/core/IJavaModelStatusConstants.java
+++ b/org.eclipse.jdt.core/model/org/eclipse/jdt/core/IJavaModelStatusConstants.java
@@ -345,4 +345,11 @@
 	 * @since 3.7
 	 */
 	public static final int CANNOT_RETRIEVE_ATTACHED_JAVADOC_TIMEOUT = 1012;
+	
+	/**
+	 * <p>Status constant indicating that the default or specific output folder is overlapping
+	 * with another source location. </p>
+	 * @since 3.8 
+	 */
+	public static final int OUTPUT_LOCATION_OVERLAPPING_ANOTHER_SOURCE = 1013;
 }
diff --git a/org.eclipse.jdt.core/model/org/eclipse/jdt/core/JavaConventions.java b/org.eclipse.jdt.core/model/org/eclipse/jdt/core/JavaConventions.java
index 5d80813..07e5fc7 100644
--- a/org.eclipse.jdt.core/model/org/eclipse/jdt/core/JavaConventions.java
+++ b/org.eclipse.jdt.core/model/org/eclipse/jdt/core/JavaConventions.java
@@ -1,5 +1,5 @@
 /*******************************************************************************
- * Copyright (c) 2000, 2010 IBM Corporation and others.
+ * Copyright (c) 2000, 2011 IBM Corporation and others.
  * All rights reserved. This program and the accompanying materials
  * are made available under the terms of the Eclipse Public License v1.0
  * which accompanies this distribution, and is available at
@@ -583,7 +583,9 @@
 	 *   <li> A project entry cannot refer to itself directly (that is, a project cannot prerequisite itself).
      *   <li> Classpath entries or output locations cannot coincidate or be nested in each other, except for the following scenarii listed below:
 	 *      <ul><li> A source folder can coincidate with its own output location, in which case this output can then contain library archives.
-	 *                     However, a specific output location cannot coincidate with any library or a distinct source folder than the one referring to it. </li>
+	 *                     However, a specific output location cannot coincidate with any library or a distinct source folder than the one referring to it.<br>
+	 *                     Note: Since 3.8, this behavior can be overridden by configuring {@link JavaCore#CORE_OUTPUT_LOCATION_OVERLAPPING_ANOTHER_SOURCE}
+	 *                     </li>
 	 *              <li> A source/library folder can be nested in any source folder as long as the nested folder is excluded from the enclosing one. </li>
 	 * 			<li> An output location can be nested in a source folder, if the source folder coincidates with the project itself, or if the output
 	 * 					location is excluded from the source folder.
diff --git a/org.eclipse.jdt.core/model/org/eclipse/jdt/core/JavaCore.java b/org.eclipse.jdt.core/model/org/eclipse/jdt/core/JavaCore.java
index d1ab9d5..9726fad 100644
--- a/org.eclipse.jdt.core/model/org/eclipse/jdt/core/JavaCore.java
+++ b/org.eclipse.jdt.core/model/org/eclipse/jdt/core/JavaCore.java
@@ -1879,6 +1879,19 @@
 	 */
 	public static final String CORE_ENABLE_CLASSPATH_MULTIPLE_OUTPUT_LOCATIONS = PLUGIN_ID + ".classpath.multipleOutputLocations"; //$NON-NLS-1$
 	/**
+	 * Core option ID: Reporting an output location overlapping another source location
+	 * <p> Indicate the severity of the problem reported when a source entry's output location overlaps another
+	 * source entry. </p>
+	 * 
+	 * <dl>
+	 * <dt>Option id:</dt><dd><code>"org.eclipse.jdt.core.classpath.outputOverlappingAnotherSource"</code></dd>
+	 * <dt>Possible values:</dt><dd><code>{ "error", "warning", "ignore" }</code></dd>
+	 * <dt>Default:</dt><dd><code>"warning"</code></dd>
+	 * </dl>
+	 * @since 3.8
+	 */
+	public static final String CORE_OUTPUT_LOCATION_OVERLAPPING_ANOTHER_SOURCE = PLUGIN_ID + ".classpath.outputOverlappingAnotherSource";  //$NON-NLS-1$
+	/**
 	 * Core option ID: Set the timeout value for retrieving the method's parameter names from javadoc.
 	 * <p>Timeout in milliseconds to retrieve the method's parameter names from javadoc.
 	 * <p>If the value is <code>0</code>, the parameter names are not fetched and the raw names are returned.
diff --git a/org.eclipse.jdt.core/model/org/eclipse/jdt/internal/core/ClasspathEntry.java b/org.eclipse.jdt.core/model/org/eclipse/jdt/internal/core/ClasspathEntry.java
index d8086ff..d51adc0 100644
--- a/org.eclipse.jdt.core/model/org/eclipse/jdt/internal/core/ClasspathEntry.java
+++ b/org.eclipse.jdt.core/model/org/eclipse/jdt/internal/core/ClasspathEntry.java
@@ -1788,30 +1788,39 @@
 
 			if (kind == IClasspathEntry.CPE_SOURCE) {
 				IPath output = entry.getOutputLocation();
-				if (output == null) continue; // 36465 - for 2.0 backward compatibility, only check specific output locations (the default can still coincidate)
-				// if (output == null) output = projectOutputLocation; // if no specific output, still need to check using default output (this line would check default output)
+				if (output == null) output = projectOutputLocation; // if no specific output, still need to check using default output (this line would check default output)
 				for (int j = 0; j < length; j++) {
 					IClasspathEntry otherEntry = classpath[j];
 					if (otherEntry == entry) continue;
 
-					// Build some common strings for status message
-					boolean opStartsWithProject = projectName.equals(otherEntry.getPath().segment(0));
-					String otherPathMsg = opStartsWithProject ? otherEntry.getPath().removeFirstSegments(1).toString() : otherEntry.getPath().makeRelative().toString();
-
 					switch (otherEntry.getEntryKind()) {
 						case IClasspathEntry.CPE_SOURCE :
-							if (otherEntry.getPath().equals(output)) {
-								return new JavaModelStatus(IJavaModelStatusConstants.INVALID_CLASSPATH, Messages.bind(Messages.classpath_cannotUseDistinctSourceFolderAsOutput, new String[] {entryPathMsg, otherPathMsg, projectName}));
+							// Bug 287164 : Report errors of overlapping output locations only if the user sets the corresponding preference.
+							// The check is required for backward compatibility with bug-fix 36465.
+							String option = javaProject.getOption(JavaCore.CORE_OUTPUT_LOCATION_OVERLAPPING_ANOTHER_SOURCE, true);
+							if (otherEntry.getPath().equals(output) 
+									&& !JavaCore.IGNORE.equals(option)) {
+								boolean opStartsWithProject = projectName.equals(otherEntry.getPath().segment(0));
+								String otherPathMsg = opStartsWithProject ? otherEntry.getPath().removeFirstSegments(1).toString() : otherEntry.getPath().makeRelative().toString();
+								int severity = JavaCore.ERROR.equals(option) ? IStatus.ERROR : IStatus.WARNING;
+								return new JavaModelStatus(severity,	IJavaModelStatusConstants.OUTPUT_LOCATION_OVERLAPPING_ANOTHER_SOURCE, 
+																			Messages.bind(Messages.classpath_cannotUseDistinctSourceFolderAsOutput, new String[] {
+																			entryPathMsg, otherPathMsg, projectName }));
 							}
 							break;
 						case IClasspathEntry.CPE_LIBRARY :
-							if (otherEntry.getPath().equals(output)) {
+							if (output != projectOutputLocation && otherEntry.getPath().equals(output)) {
+								boolean opStartsWithProject = projectName.equals(otherEntry.getPath().segment(0));
+								String otherPathMsg = opStartsWithProject ? otherEntry.getPath().removeFirstSegments(1).toString() : otherEntry.getPath().makeRelative().toString();
 								return new JavaModelStatus(IJavaModelStatusConstants.INVALID_CLASSPATH, Messages.bind(Messages.classpath_cannotUseLibraryAsOutput, new String[] {entryPathMsg, otherPathMsg, projectName}));
 							}
 					}
 				}
 			}
 		}
+		// NOTE: The above code that checks for IJavaModelStatusConstants.OUTPUT_LOCATION_OVERLAPPING_ANOTHER_SOURCE, can be configured to return
+		// a WARNING status and hence should be at the end of this validation method. Any other code that might return a more severe ERROR should be 
+		// inserted before the mentioned code.
 		return JavaModelStatus.VERIFIED_OK;
 	}
 
diff --git a/org.eclipse.jdt.core/model/org/eclipse/jdt/internal/core/ClasspathValidation.java b/org.eclipse.jdt.core/model/org/eclipse/jdt/internal/core/ClasspathValidation.java
index ea310a3..6ba4482 100644
--- a/org.eclipse.jdt.core/model/org/eclipse/jdt/internal/core/ClasspathValidation.java
+++ b/org.eclipse.jdt.core/model/org/eclipse/jdt/internal/core/ClasspathValidation.java
@@ -1,5 +1,5 @@
 /*******************************************************************************
- * Copyright (c) 2000, 2009 IBM Corporation and others.
+ * Copyright (c) 2000, 2011 IBM Corporation and others.
  * All rights reserved. This program and the accompanying materials
  * are made available under the terms of the Eclipse Public License v1.0
  * which accompanies this distribution, and is available at
@@ -37,7 +37,7 @@
 			// project doesn't exist
 			IProject resource = this.project.getProject();
 			if (resource.isAccessible()) {
-				this.project.flushClasspathProblemMarkers(true/*flush cycle markers*/, true/*flush classpath format markers*/);
+				this.project.flushClasspathProblemMarkers(true/*flush cycle markers*/, true/*flush classpath format markers*/, true);
 
 				// remove problems and tasks created  by the builder
 				JavaBuilder.removeProblemsAndTasksFor(resource);
@@ -56,12 +56,15 @@
 		}
 
 		// update classpath format problems
-		this.project.flushClasspathProblemMarkers(false/*cycle*/, true/*format*/);
+		this.project.flushClasspathProblemMarkers(false/*cycle*/, true/*format*/, false);
 		if (!status.isOK())
 			this.project.createClasspathProblemMarker(status);
 
+		// update overlapping output problem markers 
+		this.project.flushClasspathProblemMarkers(false/*cycle*/, false/*format*/, true);
+		
 		// update resolved classpath problems
-		this.project.flushClasspathProblemMarkers(false/*cycle*/, false/*format*/);
+		this.project.flushClasspathProblemMarkers(false/*cycle*/, false/*format*/, false);
 
 		if (rawClasspath != JavaProject.INVALID_CLASSPATH && outputLocation != null) {
 		 	for (int i = 0; i < rawClasspath.length; i++) {
diff --git a/org.eclipse.jdt.core/model/org/eclipse/jdt/internal/core/JavaCorePreferenceInitializer.java b/org.eclipse.jdt.core/model/org/eclipse/jdt/internal/core/JavaCorePreferenceInitializer.java
index 532ed94..835d1d6 100644
--- a/org.eclipse.jdt.core/model/org/eclipse/jdt/internal/core/JavaCorePreferenceInitializer.java
+++ b/org.eclipse.jdt.core/model/org/eclipse/jdt/internal/core/JavaCorePreferenceInitializer.java
@@ -58,6 +58,7 @@
 		defaultOptionsMap.put(JavaCore.CORE_INCOMPATIBLE_JDK_LEVEL, JavaCore.IGNORE);
 		defaultOptionsMap.put(JavaCore.CORE_ENABLE_CLASSPATH_EXCLUSION_PATTERNS, JavaCore.ENABLED);
 		defaultOptionsMap.put(JavaCore.CORE_ENABLE_CLASSPATH_MULTIPLE_OUTPUT_LOCATIONS, JavaCore.ENABLED);
+		defaultOptionsMap.put(JavaCore.CORE_OUTPUT_LOCATION_OVERLAPPING_ANOTHER_SOURCE, JavaCore.WARNING);
 
 		// encoding setting comes from resource plug-in
 		optionNames.add(JavaCore.CORE_ENCODING);
diff --git a/org.eclipse.jdt.core/model/org/eclipse/jdt/internal/core/JavaModelManager.java b/org.eclipse.jdt.core/model/org/eclipse/jdt/internal/core/JavaModelManager.java
index cdead40..fba912d 100644
--- a/org.eclipse.jdt.core/model/org/eclipse/jdt/internal/core/JavaModelManager.java
+++ b/org.eclipse.jdt.core/model/org/eclipse/jdt/internal/core/JavaModelManager.java
@@ -1481,7 +1481,8 @@
 					propertyName.equals(JavaCore.CORE_ENABLE_CLASSPATH_MULTIPLE_OUTPUT_LOCATIONS) ||
 					propertyName.equals(JavaCore.CORE_INCOMPLETE_CLASSPATH) ||
 					propertyName.equals(JavaCore.CORE_CIRCULAR_CLASSPATH) ||
-					propertyName.equals(JavaCore.CORE_INCOMPATIBLE_JDK_LEVEL)) {
+					propertyName.equals(JavaCore.CORE_INCOMPATIBLE_JDK_LEVEL) ||
+					propertyName.equals(JavaCore.CORE_OUTPUT_LOCATION_OVERLAPPING_ANOTHER_SOURCE)) {
 					JavaModelManager manager = JavaModelManager.getJavaModelManager();
 					IJavaModel model = manager.getJavaModel();
 					IJavaProject[] projects;
@@ -2248,7 +2249,8 @@
 		defaultOptionsMap.put(JavaCore.CORE_JAVA_BUILD_ORDER, JavaCore.IGNORE);
 		defaultOptionsMap.put(JavaCore.CORE_INCOMPLETE_CLASSPATH, JavaCore.ERROR);
 		defaultOptionsMap.put(JavaCore.CORE_CIRCULAR_CLASSPATH, JavaCore.ERROR);
-		defaultOptionsMap.put(JavaCore.CORE_INCOMPATIBLE_JDK_LEVEL, JavaCore.IGNORE);
+		defaultOptionsMap.put(JavaCore.CORE_INCOMPATIBLE_JDK_LEVEL, JavaCore.IGNORE); 
+		defaultOptionsMap.put(JavaCore.CORE_OUTPUT_LOCATION_OVERLAPPING_ANOTHER_SOURCE, JavaCore.WARNING);
 		defaultOptionsMap.put(JavaCore.CORE_ENABLE_CLASSPATH_EXCLUSION_PATTERNS, JavaCore.ENABLED);
 		defaultOptionsMap.put(JavaCore.CORE_ENABLE_CLASSPATH_MULTIPLE_OUTPUT_LOCATIONS, JavaCore.ENABLED);
 
diff --git a/org.eclipse.jdt.core/model/org/eclipse/jdt/internal/core/JavaModelOperation.java b/org.eclipse.jdt.core/model/org/eclipse/jdt/internal/core/JavaModelOperation.java
index 08c4b60..c56ef5a 100644
--- a/org.eclipse.jdt.core/model/org/eclipse/jdt/internal/core/JavaModelOperation.java
+++ b/org.eclipse.jdt.core/model/org/eclipse/jdt/internal/core/JavaModelOperation.java
@@ -1,5 +1,5 @@
 /*******************************************************************************
- * Copyright (c) 2000, 2010 IBM Corporation and others.
+ * Copyright (c) 2000, 2011 IBM Corporation and others.
  * All rights reserved. This program and the accompanying materials
  * are made available under the terms of the Eclipse Public License v1.0
  * which accompanies this distribution, and is available at
@@ -780,7 +780,7 @@
 	 */
 	public void runOperation(IProgressMonitor monitor) throws JavaModelException {
 		IJavaModelStatus status= verify();
-		if (!status.isOK()) {
+		if (status.getSeverity() == IStatus.ERROR) {
 			throw new JavaModelException(status);
 		}
 		try {
diff --git a/org.eclipse.jdt.core/model/org/eclipse/jdt/internal/core/JavaProject.java b/org.eclipse.jdt.core/model/org/eclipse/jdt/internal/core/JavaProject.java
index 42b1890..22cc082 100644
--- a/org.eclipse.jdt.core/model/org/eclipse/jdt/internal/core/JavaProject.java
+++ b/org.eclipse.jdt.core/model/org/eclipse/jdt/internal/core/JavaProject.java
@@ -433,7 +433,7 @@
 							new JavaModelStatus(IJavaModelStatusConstants.CLASSPATH_CYCLE, project, cycleString));
 					}
 				} else {
-					project.flushClasspathProblemMarkers(true, false);
+					project.flushClasspathProblemMarkers(true, false, false);
 				}
 			}
 		}
@@ -803,7 +803,7 @@
 		IMarker marker = null;
 		int severity;
 		String[] arguments = CharOperation.NO_STRINGS;
-		boolean isCycleProblem = false, isClasspathFileFormatProblem = false;
+		boolean isCycleProblem = false, isClasspathFileFormatProblem = false, isOutputOverlapping = false;
 		switch (status.getCode()) {
 
 			case  IJavaModelStatusConstants.CLASSPATH_CYCLE :
@@ -830,7 +830,17 @@
 					return; // setting == IGNORE
 				}
 				break;
-
+			case IJavaModelStatusConstants.OUTPUT_LOCATION_OVERLAPPING_ANOTHER_SOURCE :
+				isOutputOverlapping = true;
+				setting = getOption(JavaCore.CORE_OUTPUT_LOCATION_OVERLAPPING_ANOTHER_SOURCE, true);
+				if (JavaCore.ERROR.equals(setting)) {
+					severity = IMarker.SEVERITY_ERROR;
+				} else if (JavaCore.WARNING.equals(setting)) {
+					severity = IMarker.SEVERITY_WARNING;
+				} else {
+					return; // setting == IGNORE
+				}
+				break;
 			default:
 				IPath path = status.getPath();
 				if (path != null) arguments = new String[] { path.toString() };
@@ -852,6 +862,7 @@
 					IMarker.LOCATION,
 					IJavaModelMarker.CYCLE_DETECTED,
 					IJavaModelMarker.CLASSPATH_FILE_FORMAT,
+					IJavaModelMarker.OUTPUT_OVERLAPPING_SOURCE,
 					IJavaModelMarker.ID,
 					IJavaModelMarker.ARGUMENTS ,
 					IJavaModelMarker.CATEGORY_ID,
@@ -863,6 +874,7 @@
 					Messages.classpath_buildPath,
 					isCycleProblem ? "true" : "false",//$NON-NLS-1$ //$NON-NLS-2$
 					isClasspathFileFormatProblem ? "true" : "false",//$NON-NLS-1$ //$NON-NLS-2$
+					isOutputOverlapping ? "true" : "false", //$NON-NLS-1$ //$NON-NLS-2$
 					new Integer(status.getCode()),
 					Util.getProblemArgumentsForMarker(arguments) ,
 					new Integer(CategorizedProblem.CAT_BUILDPATH),
@@ -1356,18 +1368,20 @@
 	/**
 	 * Remove all markers denoting classpath problems
 	 */ //TODO (philippe) should improve to use a bitmask instead of booleans (CYCLE, FORMAT, VALID)
-	protected void flushClasspathProblemMarkers(boolean flushCycleMarkers, boolean flushClasspathFormatMarkers) {
+	protected void flushClasspathProblemMarkers(boolean flushCycleMarkers, boolean flushClasspathFormatMarkers, boolean flushOverlappingOutputMarkers) {
 		try {
 			if (this.project.isAccessible()) {
 				IMarker[] markers = this.project.findMarkers(IJavaModelMarker.BUILDPATH_PROBLEM_MARKER, false, IResource.DEPTH_ZERO);
 				for (int i = 0, length = markers.length; i < length; i++) {
 					IMarker marker = markers[i];
-					if (flushCycleMarkers && flushClasspathFormatMarkers) {
+					if (flushCycleMarkers && flushClasspathFormatMarkers && flushOverlappingOutputMarkers) {
 						marker.delete();
 					} else {
 						String cycleAttr = (String)marker.getAttribute(IJavaModelMarker.CYCLE_DETECTED);
 						String classpathFileFormatAttr =  (String)marker.getAttribute(IJavaModelMarker.CLASSPATH_FILE_FORMAT);
+						String overlappingOutputAttr = (String) marker.getAttribute(IJavaModelMarker.OUTPUT_OVERLAPPING_SOURCE);
 						if ((flushCycleMarkers == (cycleAttr != null && cycleAttr.equals("true"))) //$NON-NLS-1$
+							&& (flushOverlappingOutputMarkers == (overlappingOutputAttr != null && overlappingOutputAttr.equals("true"))) //$NON-NLS-1$
 							&& (flushClasspathFormatMarkers == (classpathFileFormatAttr != null && classpathFileFormatAttr.equals("true")))){ //$NON-NLS-1$
 							marker.delete();
 						}
@@ -1513,6 +1527,7 @@
 						propertyName.equals(JavaCore.CORE_ENABLE_CLASSPATH_MULTIPLE_OUTPUT_LOCATIONS) ||
 						propertyName.equals(JavaCore.CORE_INCOMPLETE_CLASSPATH) ||
 						propertyName.equals(JavaCore.CORE_CIRCULAR_CLASSPATH) ||
+						propertyName.equals(JavaCore.CORE_OUTPUT_LOCATION_OVERLAPPING_ANOTHER_SOURCE) ||
 						propertyName.equals(JavaCore.CORE_INCOMPATIBLE_JDK_LEVEL))
 					{
 						manager.deltaState.addClasspathValidation(JavaProject.this);
diff --git a/org.eclipse.jdt.core/model/org/eclipse/jdt/internal/core/SetClasspathOperation.java b/org.eclipse.jdt.core/model/org/eclipse/jdt/internal/core/SetClasspathOperation.java
index 9623813..ec0ccf2 100644
--- a/org.eclipse.jdt.core/model/org/eclipse/jdt/internal/core/SetClasspathOperation.java
+++ b/org.eclipse.jdt.core/model/org/eclipse/jdt/internal/core/SetClasspathOperation.java
@@ -114,6 +114,7 @@
 		IJavaModelStatus status = super.verify();
 		if (!status.isOK())
 			return status;
+		this.project.flushClasspathProblemMarkers(false, false, true);
 		return ClasspathEntry.validateClasspath(	this.project, this.newRawClasspath, this.newOutputLocation);
 	}