I've installed the Google Plugin for Eclipse 3.4 and it seems to work fine.
But when I start a new Web Application Project, it wants me to configure the Google App Engine SDK. I click on Add App Engine SDK, but it doesn't recognize my (valid) GAE SDK. It comes back with "Failed to initialize App Engine SDK at %path", no matter what path I give it.
Are you trying to use the Java or Python SDKs, and are you sure you downloaded the right one?
If Python, remember that the Google Eclipse plugin is currently Java-only.
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