I tested this on Eclipse 2021-03 using the latest gradle version 7.0-rc-1 and reproduced your issue where a nested project with a lib subproject was created. I then made a new Eclipse project specifying Gradle version 6.6 to be used and the resulting project was not nested. I suggest trying Gradle 6.6 and seeing if you get the same behavior I got. This might fix your project.
Also try running the gradle init
command from the command line and see what project structure you get there. I tested this on my PC where I have gradle 5.6 as the default version and got a non nested structure. You can of course always manually modify your gradle project in a few minutes to not be nested.
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