Eclipse Error: 'Setting build path' has encountered error

I had the same problem, and I found out it was because the .classpath file was hidden. Removing the hidden attribute resolved the issue.

I had the same issue with 64-bit Windows 7 and it was resolved by clearing the Hidden attribute.

Make sure that the directory and file are still there, take a look at D:\workspace\ltwitter is a valid path, has a .classpath file and it is readable. Try opening .classpath in Notepad for a test of readability.

Check directory permissions on D:\workspace\ltwitter and file permissions on D:\workspace\ltwitter\.classpath.

File Properties->Security tab in Windows Explorer