I saw the same thing. I did the following to solve it.
Open Eclipse preferences > Install/Update > Available Software Sites.
Select the Galileo location (first row) and hit the Test Connection button. It re-downloaded the download information and after this the installation did worked fine for me.
For me it happend on Mac OS X 10.6 and a clean install of Servoy 5.0.1 (5.1 is not out yet).
I don’t know if Harjo also did a clean install on his Windows 7 environment.
problem is that Subclipse is just a wrapper around the actual svn client adapter (JavaHL binary for example)
So subclipse itself doesnt do anything with the credentials thats something the client adapter layer handles
So if you would use besides Subclipse also another client (like command line) they all would use the same stuff.
this is why Subclipse doesnt touch that data because its not subclipse data.
if you want to clean it out for me it on windows7 it is here:
C:\Users[USERNAME]\AppData\Roaming\Subversion
i guess if you would throw away the contents of that dir it would ask for your credentials again
I think your passwords are really stored in the auth\svn.simple subdir.