The issue does not affect IDE users but it can block module writers.

This issue affects IDE users only. 
No dependent projects (library projects) are built by web project type!

Adame I'm not able to reproduce this issue. Please add more details.

I am not able to reproduce it now because I am not able to create web project at all:
ava.lang.NoClassDefFoundError: org/netbeans/modules/websvc/api/jaxws/project/config/Endpoints

However the case is simple:
Create web project and any other project as a library project (j2se, j2me).
Add dependency and check "build required projects".
Click build and if the library project is realy build then the issue is already fixed.

For me it worked that any changes in dependeces stored in project.xml were not propagated to build-impl.xml so the
dependent projects were not built.

I didn't notice that NCDFE filed anywhere in websvc component. Adam, can you file it there with build number, your ide
config and steps to reproduce, please? Thanks.

I've just filled #106649, I found it today when trying to reproduce this issue.

It is always reproducible in the lates daily build 200706131200.

Complete build output showing no lib projects beeing built:
init:
deps-module-jar:
deps-ear-jar:
deps-jar:
library-inclusion-in-archive:
C:\work\WebApplication4\nbproject\build-impl.xml:450: Warning: Could not find file
C:\work\MobileApplication7\dist\MobileApplication7.jar to copy.
BUILD FAILED (total time: 1 second)


fragment of the project.xml showing the dependency is set:
        <references xmlns="http://www.netbeans.org/ns/ant-project-references/2">
            <reference>
                <foreign-project>MobileApplication7</foreign-project>
                <artifact-type>jar</artifact-type>
                <script>${project.MobileApplication7}/build.xml</script>
                <target>jar</target>
                <clean-target>clean</clean-target>
                <id>jar</id>
                <properties>
                    <property name="config.active"/>
                </properties>
            </reference>

fragment of the build-impl.xml showing that the dependency is not there:
    <target depends="init" if="no.dist.ear.dir" name="deps-module-jar" unless="no.deps"/>
    <target depends="init" if="dist.ear.dir" name="deps-ear-jar" unless="no.deps"/>
    <target depends="init, deps-module-jar, deps-ear-jar" name="deps-jar" unless="no.deps"/>

your web/project/src/org/netbeans/modules/web/project/resources/build-impl.xsl is missing transformation for 
                xmlns:projdeps2="http://www.netbeans.org/ns/ant-project-references/2"

the code transforming projdeps2 in Mobility looks like this:
            <xsl:variable name="references2" select="/project:project/project:configuration/projdeps2:references"/>
            <xsl:for-each select="$references2/projdeps2:reference[not('jar') or projdeps2:artifact-type = 'jar']">
                <xsl:variable name="subproj" select="projdeps2:foreign-project"/>
                <xsl:variable name="subtarget">
                    <xsl:choose>
                        <xsl:when test="'jar'">
                            <xsl:value-of select="projdeps2:target"/>
                        </xsl:when>
                        <xsl:otherwise>
                            <xsl:value-of select="projdeps2:clean-target"/>
                        </xsl:otherwise>
                    </xsl:choose>
                </xsl:variable>
                <xsl:variable name="script" select="projdeps2:script"/>
                <xsl:choose>
                    <xsl:when test="projdeps2:properties">
                        <ant target="{$subtarget}" inheritall="false" antfile="{$script}">
                            <xsl:for-each select="projdeps2:properties/projdeps2:property">
                                <property name="{@name}" value="{.}"/>
                            </xsl:for-each>
                        </ant>
                    </xsl:when>
                    <xsl:otherwise>
                        <ant target="{$subtarget}" inheritall="false" antfile="{$script}"/>
                    </xsl:otherwise>
                </xsl:choose>
            </xsl:for-each>

Cannot reproduce, it works fine for me. I created a web project, Java library, added a dependency and built the web
project. Java library was built as well and jar file was contained in the created war file.