I have updated my android-sdk-package from r16 to r17. I have updated the Eclipse ADT-Plugin too.
My project worked perfectly fine with r16 (android-sdk r16 and Eclipse
I tripped up over the same error when using the ADT 18. There were several causes, including having to move my jar files from a lib to a libs folder. Coincidentally I was using a new workstation with JDK 7 installed. It took me several hours to fathom out that the dex build step was rejecting the compiled class files from one of the jar files I built separately because the class signature was unacceptable. The error reported by the dex build step was "trouble processing: bad class file magic (cafebabe) or version (0033.0000)"
My jar file consists of pure Java code which I build using ant. Cutting a long story short, I finally managed to get everything to work once I installed Java 6's JDK, added the path to the JDK 6 bin folder as the first item in my path statement & then rebuilt the jar file. I was then able to use the jar file in my Android project. The dex build step didn't reject the classes from the jar file and therefore my app ran on the device rather than failing with a ClassNotFoundException.
I discovered several helpful tips: - Run ant with the -v command line option and scrutinize the output carefully. That's how I knew the java6 compiler was being used at the end of all my changes. And similarly when I built the Android app using ant, the dex stage had enough detail to tell me which jar files it processed, etc.
Similarly in Eclipse I enabled the verbose level of logging for the Android build output. Preferences>Android>Build>Build output> Verbose
adb logcat output actually reports the missing class files when it loads the app. If you're using the LogCat view in Eclipse the relevant lines are in red text and easy to spot once you know they exist.
I hope this helps others in a similar predicament to one I found myself in - where I created my own pure java jar files. Several factors had changed including the Java SDK version and the ADT tools, and diagnosing the various causes was a challenge.