Android Studio showing compiler errors for no reason

Question

This started happening once I imported jcodec (http://jcodec.org/) for Android into the Studio as a module. The actual project itself compiles fine and works as expected on both devices and emulators but the compiler marks everything involving non-custom libraries as errors. Operations involving custom classes within the project does not have the compiler errors.

I tried the following: 1) Invalidate/Cache restart 2) Deleted the .idea folder and .iml files and reimported the whole project 3) Added the library via Project Structure and Synced Project with Gradle files

The worst part is that this inline compiler error happens for all projects in Android Studio (new and old) now. I am using Android Studio version 0.5.4.

Is there anything I can do to fix this? Does it have anything to do with jcodec?

jcodec build.gradle files

buildscript {
    repositories {
        mavenCentral()
    }
    dependencies {
        classpath 'com.android.tools.build:gradle:0.9.+'
    }
}
apply plugin: 'android-library'
android {
    compileSdkVersion 16
    buildToolsVersion '19.0.3'

    defaultConfig {
        minSdkVersion 11
        targetSdkVersion 16
    }

    buildTypes {
        release {
            runProguard false
            proguardFiles getDefaultProguardFile('proguard-android.txt'), 'proguard-rules.txt'
        }
    }
}

dependencies {
}

main project build.gradle

buildscript {
    repositories {
        mavenCentral()
    }
    dependencies {
        classpath 'com.android.tools.build:gradle:0.9.+'
    }
}
apply plugin: 'android'

repositories {
    mavenCentral()
}

android {
    compileSdkVersion 16
    buildToolsVersion '19.0.3'

    defaultConfig {
        minSdkVersion 11
        targetSdkVersion 16
    }
}

dependencies {
    compile 'com.android.support:appcompat-v7:19.1.0'
    compile 'com.android.support:support-v4:19.1.0'
    compile files('libs/android-async-http-1.4.4.jar')
    compile project(':jcodec')
}