Tomcat can find the hibernate3.jar. The error is coming from one of the Hibernate classes. But I think those classes are not loaded by the correct class loader. Tomcat has a rather complex class loading implementation and you are more or less required to put your jar files in the 'WEB-INF/lib' folder of the project. Anywhere else may or may not work depending on the application is doing.
I don't understand your setup. Are you running Tomcat from within a development environment? I have never tried that.
Unless line numbers have changed the following piece of code is line 167 in ConfigHelper:
Code:
stream = Environment.class.getClassLoader().getResourceAsStream( stripped );
The only possible cause for a NullPointerException on this line is if getClassLoader() returns null, which is possible if the class was loaded by the bootstrap class loader. But if configured correctly hibernate should not be loaded by the bootstrap class loader, but by one of Tomcat's class loaders. In any case, line 167 is near the end of the method and is only reached if the file it tries to load hasn't been found already. It is very likely that it is looking for '/hibernate.properties' in this case.
Don't know if this makes sense or if it helps you track down the problem....