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I experienced the exact same error and I was able to resolve as follows.
I initially installed JDeveloper Studio Edition Version: 10.1.3.3.0.4157 in a directory called c:\jdev.
Then I developed one application and had no issues in running the app using the embedded OC4J server.
Earlier this week, I wanted to test the JDeveloper 11g TP3. I downloaded the newer version and installed in a directory called c:\jdev11. I also renamed my old directory as c:\jdev10 so that there is no confusion.
Basically, at this time, I had two JDeveloper versions on my system.
JDeveloper 10g installed in c:\jdev10
JDeveloper 11g TP3 installed in c:\jdev11
After making these changes, I went back to my JDeveloper 10g version, and when I tried to run my application through the embedded OC4J container, I started getting the error described earlier in this post.
In looking through, it appears the JDeveloper Home (the directory where you installed the JDeveloper) is hardcoded in the following file:
I reverted back to original name for the directory (from C:\jdev10 to C:\jdev), and it fixed the issue.
I recommend the JDeveloper team to use a environment variable to resolve the path, rather than hardcoding in the server.xml.