How are you adding the servlet jar file to the classpath during compilation? The servlet classes are part of JEE, not JSE, so in this regard it makes no difference whether you're using Java 1.4 or Java 5.
The directory structure doesn't matter if the jar file is not added to the classpath.
I'll ask again: How are you compiling the class? Post the complete command you're typing in, along with the directory in which you're executing it.
By the way, you can't use the [img] tag to link to files that are on your local desktop. You need to upload them to a public server, or use the "Attachments" option during posting.