which version are you using? 
I´m using Archiva 1.0.2 and it does download sources, sure.

In my pom.xml i have:

        <plugin>
                <groupId>org.apache.maven.plugins</groupId>
                <artifactId>maven-eclipse-plugin</artifactId>
                <version>2.4</version>
                <configuration>
                        <outputDirectory>bin</outputDirectory>
                        <downloadSources>true</downloadSources>
                        <!--<downloadJavadoc>true</downloadJavadoc>-->
                </configuration> 
        </plugin>

you wrote "-Declipse.downloadSource=true" - think you need 
downloadSources=true ?

Torsten

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