<p>Has anyone used the <a href="http://www.cs.tufts.edu/~nr/noweb/" rel="noreferrer">noweb</a> literate programming tool on a large Java project, where several source code files must be generated in different subdirectories? How did you manage this with noweb? Are there any resources and/or best practices out there?</p>

Literate Programming works its best if the generated intermediate code can point back to the original source file to allow debugging, and analyzing compiler errors.  This usually means pre processor support, which Java doesn't support.
Additionally Literate Programming is really not necessary for Java, as the original need for a strict sequential order - which was what prompted Knuth to write a tool to put snippets together in the appropriate sequence - is not present.    The final benefit of literate programming, namely being able to write prose about the code, is also available as Javadoc which allow you to put everything in as comments.
To me, there is no benefit in literate programming for Java, and only troubles (just imagine getting IDE support).
Any particular reason you are considering it?