diff --git a/build/org.eclipse.cdt.managedbuilder.core.tests/suite/org/eclipse/cdt/managedbuilder/tests/suite/AllManagedBuildTests.java b/build/org.eclipse.cdt.managedbuilder.core.tests/suite/org/eclipse/cdt/managedbuilder/tests/suite/AllManagedBuildTests.java
index cc03a47266c..21f21c4f0ac 100644
--- a/build/org.eclipse.cdt.managedbuilder.core.tests/suite/org/eclipse/cdt/managedbuilder/tests/suite/AllManagedBuildTests.java
+++ b/build/org.eclipse.cdt.managedbuilder.core.tests/suite/org/eclipse/cdt/managedbuilder/tests/suite/AllManagedBuildTests.java
@@ -56,7 +56,7 @@ public class AllManagedBuildTests {
 //		suite.addTest(ManagedBuildCoreTests20.suite());
 //		suite.addTest(ManagedBuildCoreTests.suite());
 //		suite.addTest(ManagedProjectUpdateTests.suite());
-//		suite.addTest(ManagedCommandLineGeneratorTest.suite());
+		suite.addTest(ManagedCommandLineGeneratorTest.suite());
 //		suite.addTest(ResourceBuildCoreTests.suite());
 		suite.addTest(ManagedProject21MakefileTests.suite());
 		suite.addTest(ManagedProject30MakefileTests.suite());
diff --git a/build/org.eclipse.cdt.managedbuilder.gnu.ui/templates/projecttemplates/HelloWorldCAnsiProject/template.xml b/build/org.eclipse.cdt.managedbuilder.gnu.ui/templates/projecttemplates/HelloWorldCAnsiProject/template.xml
index 9f7244f3243..66a545fea2e 100644
--- a/build/org.eclipse.cdt.managedbuilder.gnu.ui/templates/projecttemplates/HelloWorldCAnsiProject/template.xml
+++ b/build/org.eclipse.cdt.managedbuilder.gnu.ui/templates/projecttemplates/HelloWorldCAnsiProject/template.xml
@@ -35,7 +35,7 @@
 				type="input"
 				default="%HelloWorld.sourceDir.default"
 				pattern="[a-zA-Z0-9]+"
-				mandatory="true"
+				mandatory="false"
 				persist="true"/>
 	</property-group>
 
@@ -47,7 +47,7 @@
 
 	<process type="org.eclipse.cdt.core.CreateSourceFolder">
 		<simple name="projectName" value="$(projectName)"/>
-		<simple name="path" value="src"/>
+		<simple name="path" value="$(sourceDir)"/>
 	</process>
 
 	<process type="org.eclipse.cdt.core.AddFiles">
@@ -55,7 +55,7 @@
 		<complex-array name="files">
 			<element>
 				<simple name="source" value="src/Basename.c"/>
-				<simple name="target" value="src/$(projectName).c"/>
+				<simple name="target" value="$(sourceDir)/$(projectName).c"/>
 				<simple name="replaceable" value="true"/>
 			</element>
 		</complex-array>
diff --git a/build/org.eclipse.cdt.managedbuilder.gnu.ui/templates/projecttemplates/HelloWorldCCProject/template.xml b/build/org.eclipse.cdt.managedbuilder.gnu.ui/templates/projecttemplates/HelloWorldCCProject/template.xml
index 65888acfaf6..07a0ad67417 100644
--- a/build/org.eclipse.cdt.managedbuilder.gnu.ui/templates/projecttemplates/HelloWorldCCProject/template.xml
+++ b/build/org.eclipse.cdt.managedbuilder.gnu.ui/templates/projecttemplates/HelloWorldCCProject/template.xml
@@ -34,7 +34,6 @@
 				type="input"
 				default="%HelloWorld.sourceDir.default"
 				pattern="[a-zA-Z0-9]+"
-				mandatory="true"
 				persist="true"/>
 	</property-group>
 	
diff --git a/core/org.eclipse.cdt.core/templateengine/org/eclipse/cdt/core/templateengine/process/processes/CreateSourceFolder.java b/core/org.eclipse.cdt.core/templateengine/org/eclipse/cdt/core/templateengine/process/processes/CreateSourceFolder.java
index e992661eb19..f1fecc5824c 100644
--- a/core/org.eclipse.cdt.core/templateengine/org/eclipse/cdt/core/templateengine/process/processes/CreateSourceFolder.java
+++ b/core/org.eclipse.cdt.core/templateengine/org/eclipse/cdt/core/templateengine/process/processes/CreateSourceFolder.java
@@ -48,6 +48,12 @@ public class CreateSourceFolder extends ProcessRunner {
 	}
 
 	protected void createSourceFolder(String projectName, String targetPath, IProgressMonitor monitor) throws ProcessFailureException {
+		//If the targetPath is an empty string, there will be no source folder to create.
+		// Also this is not an error. So just return gracefully.
+		if (targetPath == null || targetPath.equals("")) {
+			return;
+		}
+		
 		IProject projectHandle = ResourcesPlugin.getWorkspace().getRoot().getProject(projectName);
 		
 		if (!projectHandle.exists()) {