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In the Navigator view I copied a project (Ctrl-c/Ctrl-v). In the dialog I entered the parent directory (of the copied project) and a new name for the project. All directories under the parent directory were deleted (including the copied project directory).
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I can't reproduce this. If I select the parent directory (the workspace location), then the copy fails with the message "Invalid project description. d:\workspace overlaps the workspace location: d:\workspace". Nothing gets deleted. Are you using the final Eclipse 3.2 release?
*** Bug 156804 has been marked as a duplicate of this bug. ***
I tried to reproduce this today. I was able to copy and paste a project into the same workspace successfully once (copied project is parallel to the original project). I deleted the copied project and tried to copy the same project again. The Copy Project dialog always shows "Invalid Location Path" even when I use the wizzard to create a new directory for it. I was using the same location and project name for the copied project as in the first successful attempt. I had this same problem with the Copy Project wizzard when I first reported this bug. I had to go through some machinations to finally get it to copy the project without complaining about the path. It could have been something I did while trying to get the Copy Project dialog to cooperate that led to it deleting parallel projects. Note that I use a different directory for my workspace and the source code for my projects. I added all the projects into the workspace with the New Project wizzard.
Yes, I'm using the 3.2 final release.
The only explanation i can think of is that you set the location of the copied project to be the parent directory of the original project. Then, deleting that copied project would in fact delete all directories parallel to the original project. I can't reproduce your "Invalid Location Path" problem in the project copy dialog either. However, I can see that the wizard has some problems - by default it does not change the location of the copied project, so the copy will always fail unless you change the location manually. Also, it should validate the location and not allow you to push "ok" until a valid location is entered. I'll enter a bug against the UI for this.
I have entered bug 164695 for the problematic behaviour of the copy dialog. I'm going to close this as invalid as I don't have a test case to reproduce. If you can reproduce, please provide exact steps.