Thank you very much. That was the problem, but in a more indirect way.

The .classpath file in the xxx-ejb project had an entry of;

        

when I removed the excluding attribute and reopened the Hibernate 
Configurations view, it worked fine.

I wonder how the excluding attribute got added though ? I dont hack the 
.classpath files for Eclipse projects in any way.

Perhaps consider annonating the error message with a "is 
META-INF/persistence.xml in the classpath" style hint ?

Thanks again. 

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