This thread actually solved my problem, indirectly:
http://www.jboss.com/index.html?module=bb&op=viewtopic&t=112375
The key is:
One other potential trap is that I have just upgraded from Seam 1.2.1 to 2.0b1 and
"managed-persistence-context" has been moved from namespace core to persistence.
If this is the case, then don't forget to add the persistence namespace to your XML
namespace config:
xmlns:persistence="http://jboss.com/products/seam/persistence"
I am actually using Seam 1.2 and thus I must revert to core tag. And it works!
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