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If you do not have a project selected when you open the customized "New Java Class" wizard, there is no way of specifying the location into which the class will be created. This is a result of aggressive trimming of original code. One question is whether or not we really want to force the student to select a source location or if we want to sort that out in some automagic way. Suggestions welcome.
Maxime Caron and me are working on that.
IMHO, this should be done automatically. I've put some thoughts in Bug 300672 that I think address source location. In that spirit, I'm going to mark this as a duplicate of that bug. *** This bug has been marked as a duplicate of bug 300672 ***