You also need to add a reference to this library in the application-j2ee-engine.xml deployement descriptor in the Enterprise Application project. Open this xml up, and in the editor on the General tab, highlight the "References" folder and click the Add button. In the popup click the "Select library/interface/service" button. Then select the com.sap.mw.jco library and click OK. In addition to these you will need to select com.sap.aii.proxy.framework.
Save your changes and deploy...these setting setup the proper runtime linkage to the libraries on the server. The DC settings you did are only for build time...they will do not also link you to the proper libs on the server.
Hope this helps!
Jeff
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