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1. Create a JS project with a source folder. 2. Create a sub folder under the source folder. 3. In project properties add the sub folder as a source folder. You should get an error message at this point alerting the user that the folders are improperly nested. Error message is only showing in the log.
Created attachment 186550 [details] patch
It looks like this got messed up long ago during the transition from JDT. Code existed to do these updates, but was wiped out when the output directory validation code was removed.
Checked into HEAD and 3.2.3