For any eclipse newbie, you will find out that all the plugins you download or update will be placed by you or the update manager in the eclipse install folder under the plugins directory. However, when updating comes around or removing or any kind of update, it is a hassle to manage it. That is why you can create multiple plugin extension directories in order to facillitate plugin management. I have attached a simple zip file with the correct format of an extension directory.
It basically contains the following structure:
The .eclipseextension is a text file that contains the following:
You now have a succesfull extension directory. You now can go to eclipse to add it.
1) Open Eclipse
2) Click on Help ==> Manage Configuration
3) Click on Add An Extension Location:
4) Choose your directory
5) Restart your workbench
6) You are set and dandy!! Ready to roll!!
Hope this works for you. I have also a testing eclipse extension folder, so I can drop and test new plugins without affecting my workbench.