Hi Tijs,
Thanks for your response. The activiti version that I am using is old version and for that reason I cannot use the latest.
Coming to the problem. I downloaded the above zip from the archives and put it locally on my machine. I used the option
Help –> Install New Software
There I added this new site by choosing the location and "archive" button. This is when the error appears.
I did unzip the archived the zip file but just to investigate that it has right set of files, eclipse does not give option to install it from the exploded form.
I even tried to extract all the jar files from features and plugins folders and put it into the eclipse dropins folder but that also does not work as expected, since it has a site.xml and of course it needs to resolve the dependency.