What have you set in the Preferences for the location of the Instant Client install? Look under Preferences->Databases->Advanced.
SQL Developer Team
This value is set to at 220.127.116.11.0 instant client directory. Note i am now re-trying the EA version and it is connecting to the database with no errors.
The only thing I can think that might have fixed it is that I moved to 4.1.5 temporarily this time before moving to 4.2, but I doesn't really explain why it's working now.
Anyway thanks for following up.
After fiddling with the Database > Advanced preferences for Oracle client you should restart SQL Developer, so maybe that is why it worked after switching between the 4.2 EA and 4.1.5.