JD,
The hot deploy IS working if you are seeing the failure message. MyEclipse ‘portion’ of the Hot deploy step is to get the file out to the app server, after that it is up to the app server to handle the file correctly… MyEclipse does not instrument the app server in anyway.
So for example, if your app server doesn’t support hot deploy, or you have it turned off, OR you are changing the structure of your class file such that it is too far changed for a successful hot deploy, then hot deploy will “fail” at the app server step in all these cases.
You should likely be aware of the fact that changing the structure of your class (methods, members, etc.) will likely cause hot deploy to fail on the server side 9 times out of 10, but if you are just changing method implementations then it should mostly work.
Do you actually see reload errors from JBoss in the console? I totally ignore that dialog you are talking about and just watch the messages in the console to see if Tomcat reloads my class or not.