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Eclipse 3.7.1 I have the same problem as bug 354338 where it is taking forever to start a launch config. Turns out it is deleting the workspace files for a rather large workspace. I can delete these files from the file-system but if I forget and accidentally launch the config first and then hit Cancel while the progress monitor is at 57% (deleting), it won't cancel the operation until all the files are deleted. I quickly looked at the code and it appears LauncherUtils.clearWorkspace is the entry point. It receives a progress monitor but then it calls out to CoreUtility.deleteContent which actually does the deletion on disk. This method doesn't (but could) take a progress monitor and check for cancellation each iteration of the loop.
Fixed in master, the progress monitor is now used in a much smarter manner for Eclipse, OSGi and JUnit launches. I updated the javadoc on the API clear() method of AbstractPDELaunchConfiguration to inform users that a CoreException may be thrown with a cancel status if the operation is cancelled (this is not a change in API behaviour).