Ensure your Eclipse setup (Window, Preferences, Installed JREs) are pointing at your new install of the JDK. Then check the same for your project (right click on project, Properties, Java Compiler). Decide whether to Enable project specific setting (I suggest you use Workspace defaults previously configured unless you have a reason for this project to be unique.) In any case, the compiler should be pointing at your 1.7 JDK installation.
There's probably some baggage left over from your project's previous configuration that just needs to be modified to fit in your new environment. Shouldn't be a big deal. Let us know how it's going.
Learning Java using Eclipse on OpenSUSE 11.2
Linux user#: 501795
Next, had to re install junit libraries
Right click your project, Build path->Configure build path->Libraries->Add Library and select JUnit.
Now, it seems to be back to working status....
Joined: Oct 24, 2010
Glad you fixed it. It wasn't clear (to me) that your problem was with User Installed Libraries, but that's always a possibility when rebuilding a Workspace or importing an existing project into a new Workspace.