I ran into this as well.
If you have an xml file open and click the 'Run' button, then instead of running your Android project Eclipse will try to run a transform on the xml file. It then creates a new xml file with the output of the transform and adds it to your project. Then the project will fail to run at all because of the existence of the duplicate xml file.
So make sure you don't have any duplicate xml files in your project (look at the manifest file, as well as layout files). The way I work around this is to make sure the project tree has focus (or just select a tab with a java file) before clicking 'Run'.
There is likely a better way to handle this (via a config change perhaps), but I'm pretty new to Eclipse and that's the workaround I came up with :). Hope that helps.
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