I use JBoss 4.2.3 and MySQL 5.1.6. Here is what I do. In the JBoss application home directory, go to .\WebContent\WEB-INF\lib\ directory, and copy the mysql-connector-java-5.1.6-bin.jar file in it.
Then go back to the application home directory, it should have a file called ".classpath", and put in the entry in as :
<classpathentry kind="lib" path="WebContent/WEB-INF/lib/mysql-connector-java-5.1.6-bin.jar"/>
The mysql-connector-java-5.1.6-bin.jar file should be in the home directory where you install the MySQL.
Hope this can be helpful.