This project was created via the seam project wizard, but it was a rev or two ago of JBDS and I have no idea whether it was with the "new" seam project wizard. Yes, "new seam runtime" is the the new runtime I added in trying to get rid of this error.
I had this problem with another project, and changing something else in one of the 3 related projects fixed it, but I can't remember what I did!
Here is my org.jboss.tools.seam.core.prefs. FYI I just changed it back to "seam" so that's what's in this file
#Fri Oct 15 05:14:32 GMT-05:00 2010
action.package=dne.nib.assettag.action
action.sources=/assettag-ejb/ejbModule
eclipse.preferences.version=1
model.package=dne.nib.assettag.model
model.sources=/assettag-ejb/ejbModule
seam.ear.project=assettag-ear
seam.ejb.project=assettag-ejb
seam.project.connection.profile=Local MySQL
seam.project.deployment.type=ear
seam.project.settings.version=1.1
seam.project.web.root.folder=/assettag/WebContent
seam.runtime.name=seam
seam.settings.changed.by.user=true
seam.test.creating=false
seam.test.project=assettag-test
test.package=org.domain.assettag.test
test.sources=/assettag-test/test-src