javax.xml.parsers.FactoryConfigurationError: Provider org.apache.xerces.jaxp.SAXParserFactoryImpl not found

This happens when gwt-gadget.jar is added to the build path. Remove any SAXParserFactoryImpl class from your build path (Remove the $JAVA_HOME/jre/lib/jaxp.properties fixed the issue.)

[WARN] failed JettyContainerService$ApiProxyHandler@4478de9f: javax.xml.parsers.FactoryConfigurationError: Provider org.apache.xerces.jaxp.SAXParserFactoryImpl not found
[WARN] Error starting handlers
javax.xml.parsers.FactoryConfigurationError: Provider org.apache.xerces.jaxp.SAXParserFactoryImpl not found
at javax.xml.parsers.SAXParserFactory.newInstance(SAXParserFactory.java:134)
at org.mortbay.xml.XmlParser.setValidating(XmlParser.java:91)
at org.mortbay.xml.XmlParser.(XmlParser.java:83)
at org.mortbay.jetty.webapp.TagLibConfiguration.configureWebApp(TagLibConfiguration.java:210)
at org.mortbay.jetty.webapp.WebAppContext.startContext(WebAppContext.java:1247)
at org.mortbay.jetty.handler.ContextHandler.doStart(ContextHandler.java:517)
at org.mortbay.jetty.webapp.WebAppContext.doStart(WebAppContext.java:467)
at org.mortbay.component.AbstractLifeCycle.start(AbstractLifeCycle.java:50)
at org.mortbay.jetty.handler.HandlerWrapper.doStart(HandlerWrapper.java:130)
at org.mortbay.component.AbstractLifeCycle.start(AbstractLifeCycle.java:50)
at org.mortbay.jetty.handler.HandlerWrapper.doStart(HandlerWrapper.java:130)
at org.mortbay.jetty.Server.doStart(Server.java:224)
at org.mortbay.component.AbstractLifeCycle.start(AbstractLifeCycle.java:50)
at com.google.appengine.tools.development.JettyContainerService.startContainer(JettyContainerService.java:186)
at com.google.appengine.tools.development.AbstractContainerService.startup(AbstractContainerService.java:162)
at com.google.appengine.tools.development.DevAppServerImpl.start(DevAppServerImpl.java:172)
at com.google.appengine.tools.development.gwt.AppEngineLauncher.start(AppEngineLauncher.java:119)
at com.google.gwt.dev.DevMode.doStartUpServer(DevMode.java:509)
at com.google.gwt.dev.DevModeBase.startUp(DevModeBase.java:1068)
at com.google.gwt.dev.DevModeBase.run(DevModeBase.java:811)
at com.google.gwt.dev.DevMode.main(DevMode.java:311)
[WARN] Nested in javax.xml.parsers.FactoryConfigurationError: Provider org.apache.xerces.jaxp.SAXParserFactoryImpl not found:
java.lang.ClassNotFoundException: org.apache.xerces.jaxp.SAXParserFactoryImpl
at java.net.URLClassLoader$1.run(URLClassLoader.java:202)
at java.security.AccessController.doPrivileged(Native Method)
at java.net.URLClassLoader.findClass(URLClassLoader.java:190)
at java.lang.ClassLoader.loadClass(ClassLoader.java:306)
at com.google.appengine.tools.development.IsolatedAppClassLoader.loadClass(IsolatedAppClassLoader.java:176)
at java.lang.ClassLoader.loadClass(ClassLoader.java:247)
at javax.xml.parsers.FactoryFinder.getProviderClass(FactoryFinder.java:111)
at javax.xml.parsers.FactoryFinder.newInstance(FactoryFinder.java:146)
at javax.xml.parsers.FactoryFinder.findJarServiceProvider(FactoryFinder.java:298)
at javax.xml.parsers.FactoryFinder.find(FactoryFinder.java:223)
at javax.xml.parsers.SAXParserFactory.newInstance(SAXParserFactory.java:128)
at org.mortbay.xml.XmlParser.setValidating(XmlParser.java:91)
at org.mortbay.xml.XmlParser.(XmlParser.java:83)
at org.mortbay.jetty.webapp.TagLibConfiguration.configureWebApp(TagLibConfiguration.java:210)
at org.mortbay.jetty.webapp.WebAppContext.startContext(WebAppContext.java:1247)
at org.mortbay.jetty.handler.ContextHandler.doStart(ContextHandler.java:517)
at org.mortbay.jetty.webapp.WebAppContext.doStart(WebAppContext.java:467)
at org.mortbay.component.AbstractLifeCycle.start(AbstractLifeCycle.java:50)
at org.mortbay.jetty.handler.HandlerWrapper.doStart(HandlerWrapper.java:130)
at org.mortbay.component.AbstractLifeCycle.start(AbstractLifeCycle.java:50)
at org.mortbay.jetty.handler.HandlerWrapper.doStart(HandlerWrapper.java:130)
at org.mortbay.jetty.Server.doStart(Server.java:224)
at org.mortbay.component.AbstractLifeCycle.start(AbstractLifeCycle.java:50)
at com.google.appengine.tools.development.JettyContainerService.startContainer(JettyContainerService.java:186)
at com.google.appengine.tools.development.AbstractContainerService.startup(AbstractContainerService.java:162)
at com.google.appengine.tools.development.DevAppServerImpl.start(DevAppServerImpl.java:172)
at com.google.appengine.tools.development.gwt.AppEngineLauncher.start(AppEngineLauncher.java:119)
at com.google.gwt.dev.DevMode.doStartUpServer(DevMode.java:509)
at com.google.gwt.dev.DevModeBase.startUp(DevModeBase.java:1068)
at com.google.gwt.dev.DevModeBase.run(DevModeBase.java:811)
at com.google.gwt.dev.DevMode.main(DevMode.java:311)