My installation is Eclipse 3.1 and MyEclipse 4.0M2.
To reproduce, select a project and choose “add Hibernate capabilities”. Go through the dialogs until you are asked to select the Hibernate config file. Hit browse and select existing config file but do not hit Next. You will now see a reference to the file you selected in the “Existing config file” box. Now hit “Browse” again, but do not select a file; just hit cancel.
At this point the file the “Existing config file” box should have the same name you selected the first time, but instead, it is blank. After cancelling the file selection dialog, the old value should be preserved.