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Click on Window->Android SDK and AVD Manager->Virtual Devices in order to create an Android Virtual Device ( emulator ). Click New, scroll down to the box that says name and assign an Android Virtual Device name such as: My_AVD Next click on the box that says target and use the arrow button and scroll down and select appropriate Android version you want to develop with such as, Android 3.2-API Level 13. Next scroll down to the box that says Skin and Click on Resolution, enter the numbers 420x580 and select Create AVD, this will create your Android Virtual Device ( emulator ), for program testing.
Once all the components for Android have been updated you will need to create an Android Virtual Device. Congratulations, you should now have the Android SDK setup to work with Eclipse IDE and you can begin developing Android Applications.