diff --git a/org.scala-ide.sdt.core/src/scala/tools/eclipse/ScalaProject.scala b/org.scala-ide.sdt.core/src/scala/tools/eclipse/ScalaProject.scala
index 883791b69f..37ceb45c90 100644
--- a/org.scala-ide.sdt.core/src/scala/tools/eclipse/ScalaProject.scala
+++ b/org.scala-ide.sdt.core/src/scala/tools/eclipse/ScalaProject.scala
@@ -142,8 +142,6 @@ class ScalaProject(val underlying: IProject) extends HasLogger {
   def externalDepends = underlying.getReferencedProjects
 
   lazy val javaProject = {
-    if (!underlying.exists())
-      underlying.create(null)
     JavaCore.create(underlying)
   }
 
@@ -364,10 +362,15 @@ class ScalaProject(val underlying: IProject) extends HasLogger {
   }
 
   def initialize(settings: Settings, filter: Settings#Setting => Boolean) = {
-    val env = new NameEnvironment(javaProject)
-
-    for ((src, dst) <- sourceOutputFolders(env))
-      settings.outputDirs.add(EclipseResource(src), EclipseResource(dst))
+    
+    // if the workspace project doesn't exist, it is a virtual project used by Eclipse.
+    // As such the source folders don't exist.
+    if (underlying.exists()) {
+      val env = new NameEnvironment(javaProject)
+  
+      for ((src, dst) <- sourceOutputFolders(env))
+        settings.outputDirs.add(EclipseResource(src), EclipseResource(dst))
+    }
 
     // TODO Per-file encodings
     val sfs = sourceFolders
diff --git a/org.scala-ide.sdt.core/src/scala/tools/eclipse/javaelements/ScalaCompilationUnit.scala b/org.scala-ide.sdt.core/src/scala/tools/eclipse/javaelements/ScalaCompilationUnit.scala
index c30a92d14b..028a985c3e 100644
--- a/org.scala-ide.sdt.core/src/scala/tools/eclipse/javaelements/ScalaCompilationUnit.scala
+++ b/org.scala-ide.sdt.core/src/scala/tools/eclipse/javaelements/ScalaCompilationUnit.scala
@@ -34,6 +34,7 @@ import org.eclipse.jdt.core.IParent
 import org.eclipse.jdt.internal.core.JavaElement
 import org.eclipse.jdt.internal.core.SourceRefElement
 import scala.tools.eclipse.util.HasLogger
+import org.eclipse.jdt.core.compiler.CharOperation
 
 trait ScalaCompilationUnit extends Openable with env.ICompilationUnit with ScalaElement with IScalaCompilationUnit with IBufferChangedListener with HasLogger {
   val project = ScalaPlugin.plugin.getScalaProject(getJavaProject.getProject)
@@ -58,7 +59,9 @@ trait ScalaCompilationUnit extends Openable with env.ICompilationUnit with Scala
   }
   
   def createSourceFile : BatchSourceFile = {
-    new BatchSourceFile(file, getContents)
+    // call getContent() only when the underlying resource exists, otherwise
+    // it logs an exception
+    new BatchSourceFile(file, if (getResource.exists) getContents else CharOperation.NO_CHAR)
   }
 
   def getProblemRequestor : IProblemRequestor = null