Hi -- it looks like this is an Eclipse-specific error, & I confess that I'm not at all familiar with Eclipse (being a command-line person
But I think you want to try step 14 under 'Android Eclipse Plugin' here:
Alternatively, you could edit local.properties directly; however, the boilerplate on this file advises against doing this as it's supposed to be auto-generated by Android Tools. I'm afraid I don't know how/why/whether Eclipse is supposed to interact with this. You could also just delete it & see if Eclipse regenerates it?
Apologies anyway that it slipped through into the sample code.