I am going to convert my Android projects from Ant to Gradle.
My Eclipse workspace is very simple:
Workspace
MyApp
MyApp-AndroidLibrary
Just in case people (like myself or gladman) still have this problem and couldn't find a solution. With the current version of Gradle you can do this:
Move the file settings.gradle to the directory My-App and replace the include by includeFlat 'MyApp-AndroidLibrary'. This should fix the problem.
Also compare this question and see this section in the Gradle User Guide for further details.