I have configured my Eclipse to have a C:\Eclipse\external_libs directory where I place all my external libraries. In my case , my external libs are WATIJ, XMLUNIT, and XOM . Adding the external libs to the project is no problem... there is no question about that.
I also place my JDK at C:\Eclipse\Javasoft .
What I am wondering IS : is there a better location to place external libs? It's important to note that I like being able to pack my Eclipse directory into a zip file and move it and open it on another computer in a portable fashion.