I had the same issue.  I was able to fix it, and I believe what did it is 
running the SDK manager from the command line ($ADK_HOME/tools/android).   
I removed and re-installed the support libraries (in a section way down 
near the bottom)

 The problem seems to have something to do with the library being 
downloaded to the wrong place, when the manager is run from eclipse.  In my 
case it is a bug that the template require the support library at all...

G. Blake Meike
Marakana

The second edition of Programming Android is now on-line:
http://shop.oreilly.com/product/0636920023005.do

On Friday, June 29, 2012 12:17:43 PM UTC-7, John Langan wrote:
>
> I upgraded Eclipse yesterday with the latest updates. I installed Android 
> SDK Tools Rev 20,  Android SDK Platfom-Tools Rev 12 and Android 4.1 API 16.
>
> Now when I try to create an Android Project I get as far as the Install 
> Dependencies panel where it claims a template is needed but not installed:
> http://developer.android.com/sdk/compatibility-library.html, Required 
> version: 8
>
> If I click the Install/Upgrade button it installs SDK 2.2, API 8. This 
> makes no difference as I still get the same message and can go no further 
> in creating a project.
> Any help on how to resolve this problem would be much appreciated.
>  
> John.
>

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