diff --git a/core/org.eclipse.cdt.ui/src/org/eclipse/cdt/internal/ui/wizards/classwizard/NewClassWizardUtil.java b/core/org.eclipse.cdt.ui/src/org/eclipse/cdt/internal/ui/wizards/classwizard/NewClassWizardUtil.java
index 3b5b97a557d..7995b62511f 100644
--- a/core/org.eclipse.cdt.ui/src/org/eclipse/cdt/internal/ui/wizards/classwizard/NewClassWizardUtil.java
+++ b/core/org.eclipse.cdt.ui/src/org/eclipse/cdt/internal/ui/wizards/classwizard/NewClassWizardUtil.java
@@ -9,6 +9,7 @@
  *     QNX Software Systems - initial API and implementation
  *     IBM Corporation
  *     Markus Schorn (Wind River Systems)
+ *     Warren Paul (Nokia) - 174238
  *******************************************************************************/
 package org.eclipse.cdt.internal.ui.wizards.classwizard;
 
@@ -114,7 +115,9 @@ public class NewClassWizardUtil {
                         if (sourceFolder != null)
                             return sourceFolder;
                         if (resType == IResource.PROJECT) {
-                            return (ICContainer)elem;
+                        	if (elem instanceof ICContainer) {
+                                return (ICContainer)elem;
+                        	}
                         }
                     }
                 }
diff --git a/core/org.eclipse.cdt.ui/src/org/eclipse/cdt/ui/wizards/NewClassCreationWizardPage.java b/core/org.eclipse.cdt.ui/src/org/eclipse/cdt/ui/wizards/NewClassCreationWizardPage.java
index 888dff1467f..05d4b4d4f22 100644
--- a/core/org.eclipse.cdt.ui/src/org/eclipse/cdt/ui/wizards/NewClassCreationWizardPage.java
+++ b/core/org.eclipse.cdt.ui/src/org/eclipse/cdt/ui/wizards/NewClassCreationWizardPage.java
@@ -8,6 +8,7 @@
  * Contributors:
  *     QNX Software Systems - initial API and implementation
  *     IBM Corporation
+ *     Warren Paul (Nokia) - 174238
  *******************************************************************************/
 package org.eclipse.cdt.ui.wizards;
 
@@ -1198,6 +1199,7 @@ public class NewClassCreationWizardPage extends NewElementWizardPage {
 		        }
 		        changedFields = HEADER_FILE_ID | SOURCE_FILE_ID;
 			    updateFileGroupEnableState();
+			    handleFieldChanged(SOURCE_FOLDER_ID);
 		    }
 		    if (field == fHeaderFileDialogField) {
 	            changedFields |= HEADER_FILE_ID;
@@ -1451,8 +1453,10 @@ public class NewClassCreationWizardPage extends NewElementWizardPage {
 					status.setWarning(NewClassWizardMessages.getString("NewClassCreationWizardPage.warning.NotInACProject")); //$NON-NLS-1$
 				}
 			    if (NewClassWizardUtil.getSourceFolder(res) == null) {
-					status.setError(NewClassWizardMessages.getFormattedString("NewClassCreationWizardPage.error.NotASourceFolder", folderPath)); //$NON-NLS-1$
-					return status;
+			    	if (isUseDefaultSelected()) {
+						status.setError(NewClassWizardMessages.getFormattedString("NewClassCreationWizardPage.error.NotASourceFolder", folderPath)); //$NON-NLS-1$
+						return status;
+			    	}
 				}
 			} else {
 				status.setError(NewClassWizardMessages.getFormattedString("NewClassCreationWizardPage.error.NotAFolder", folderPath)); //$NON-NLS-1$
@@ -1698,6 +1702,12 @@ public class NewClassCreationWizardPage extends NewElementWizardPage {
 			return status;
 		}
 		
+		// Make sure the file location is under a source root
+		if (NewClassWizardUtil.getSourceFolder(path) == null) {
+			status.setError(NewClassWizardMessages.getString("NewClassCreationWizardPage.error.HeaderFileNotInSourceFolder")); //$NON-NLS-1$
+			return status;
+		}
+		
 		boolean fileExists = false;
 		// check if file already exists
 		IResource file = NewClassWizardUtil.getWorkspaceRoot().findMember(path);
@@ -1765,6 +1775,12 @@ public class NewClassCreationWizardPage extends NewElementWizardPage {
 			return status;
 		}
 		
+		// Make sure the file location is under a source root
+		if (NewClassWizardUtil.getSourceFolder(path) == null) {
+			status.setError(NewClassWizardMessages.getString("NewClassCreationWizardPage.error.SourceFileNotInSourceFolder")); //$NON-NLS-1$
+			return status;
+		}
+		
 		boolean fileExists = false;
 		// check if file already exists
 		IResource file = NewClassWizardUtil.getWorkspaceRoot().findMember(path);