If the environment is set up on a MAC system, the ADT should be installed in the Applications folder.
If the ADT is installed in any other location on MAC, or if the environment is set up on a Windows system, the ADT SDK path needs to be updated in local.properties file that is available in src\android folder in the extracted the source archive mobileworkspace-src.zip. In this file, point the sdk.dir variable to ADT SDK location on your desktop.
NOTE
The adobe-lc-mobileworkspace-src.zip contains PhoneGap SDK 5.0. Ensure that PhoneGap SDK is not pre-installed.