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It turns out where this file appears in the jar file is very important. If it is in the wrong spot, it simply will not work (it took a lot of trial and error to figure this out!). In our case, since we wanted our GWT module to include everything in the 'org.sagebionetworks.repo.model' package. Therefore, our module xml file need to be in one directory shy of this package (\org\sagebionetworks\repo).
The contents of the synapseDTOs.gwt.xml module file are as follows:
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The first thing to point out is the path="model". The GWT compiler will know to include all source file in jar file under 'org/sagebionetworks/repo/model' by combining the path of the gwt.xml file with the path property in the file! I am not sure why they made this so complicated but this seems to be the only combination of file path and property path that produces a working module. If there is a simpler way to do this then please update this document.
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