This is the example that got me. The Arduino project .pde file is a test of an accelerometer library (Adxl345.cpp, .h). Here is what the directory listing looks like.
This yeilds the cryptic error
undefined reference to `loop'
undefined reference to `setup'
or both. The fix is to rename the Arduino project as anything other than "Adxl345". Using "Save As" in arduino should do the trick. This is what the listing looks like that works: