I downloaded an existing Maven project into eclipse.
When I ran mvn install using the pom.xml file it failed showing the following error:
 mvn install
 Error reading settings.xml: Expected root element 'settings' but found 'servers' 
 (position: START_TAG seen  <servers>... @1:10)
 Line:   1
 Column: 10
I am using Maven 2.2.1 . and got settings.xml file under the M2 Home
I got this error in intellij (so the warning is not IDE specific) having imported a project using the POM at spring-data-neo4j-examples/cineasts/pom.xml on github 
My settings.xml file contained the following
  <server>
        <id>LocalTomcat</id>
        <username>tomcat</username>
        <password>tomcat</password>
  </server>
Looking at http://maven.apache.org/settings.html I found the following settings template which contains the appropriate namespaces.
<settings xmlns="http://maven.apache.org/SETTINGS/1.0.0"
  xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance"
  xsi:schemaLocation="http://maven.apache.org/SETTINGS/1.0.0
                      http://maven.apache.org/xsd/settings-1.0.0.xsd">
  <localRepository/>
  <interactiveMode/>
  <usePluginRegistry/>
  <offline/>
  <pluginGroups/>
  <servers/>
  <mirrors/>
  <proxies/>
  <profiles/>
  <activeProfiles/>
</settings>
I dropped in the original <server> settings into the  element. 
The warning no longer occurred upon running mvn compile
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