The JD-eclipse plugin 0.1.3 can only decompile .class files that are visible from the classpath/Build Path.
If your class resides in a .jar, you may simply add this jar to the Build Path as another library. From the Package Explorer browse your new library and open the class in the Class File Editor.
If you want to decompile any class on the file system, it has to reside in the appropriate folder hierachy, and the root folder has to be included in the build path. Here is an example:
Note: If someDir is a subfolder of your project, you might be able to skip step 2 (link folder) and add it directly to the Build Path. But that does not work, if it is the compiler output folder of the Eclipse project.
P.S. I wish I could just double click any .class file in any project subfolder without the need to have it in the classpath...