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Found the problem.
It was an issue with the CURSOR with the SELECT ... FROM (SELECT CASE WHEN THEN ELSE END). After swithing to the DECODE statement, Designer is able to generate the package.
WHEN ISOLATION_IND = 'Y' THEN
WHEN OPERATED_IND = 'Y' THEN
However, still strange to me that Designer doesn't like the CASE as part of SELECT.
Edited by: user476620 on Oct 18, 2012 8:13 PM
That is Designer showing its age and state of non-maintenance. Designer pre-dates Oracle's support for the ANSI SQL CASE structure, and no-one has bothered to go and update the SQL validation in Designer.
Glad you figured this out for yourself - your question seemed very familiar, but I couldn't remember why. When you came up with the answer, I'm going "Ohhhh, yeahhhhh! Now I remember! I had that problem too."