A DESCRIPTION OF THE PROBLEM :
The Java schema validator does not find an error in an invalid XML file.

Output of Validator of XML plugin of Notepad++:
ERROR: Element '{http://www.example.org/root}CollectionMember': No match found for key-sequence ['object1'] of keyref '{http://www.example.org/root}Collectiontype_defined'.

STEPS TO FOLLOW TO REPRODUCE THE PROBLEM :
1. Compile attached program
2. Place attached XSD and XML in same folder as compiled program
3 run program: java Test schema.xsd invalid.xml

EXPECTED VERSUS ACTUAL BEHAVIOR :
EXPECTED -
An execption should be printed since the referenced type ("object1") is missing in "invalid.xml" (see "valid.xml" for a valid file).
ACTUAL -
No exception occurrs.

---------- BEGIN SOURCE ----------
-------------------- start of Test.java --------------------
package org.example;

import java.io.File;

import javax.xml.XMLConstants;
import javax.xml.transform.stream.StreamSource;
import javax.xml.validation.Schema;
import javax.xml.validation.SchemaFactory;
import javax.xml.validation.Validator;

import org.xml.sax.SAXException;

public class Test {

    public static void main(final String... args) throws SAXException {

        if (args.length != 2) {
            System.out.println("Usage: java Test schema.xml filetovalidate.xml");
            return;
        }

        final SchemaFactory schemaFactory = SchemaFactory.newInstance(XMLConstants.W3C_XML_SCHEMA_NS_URI);
        final Schema schema = schemaFactory.newSchema(new File(args[0]));

        final Validator validator = schema.newValidator();

        try {
            validator.validate(new StreamSource(new File(args[1])));
            System.out.println("No problems found in XML.");
        } catch (Exception e) {
            System.out.println("Problems occurred:");
            e.printStackTrace();
        }
    }

}
-------------------- end of Test.java --------------------

-------------------- start of schema.xsd --------------------
<?xml version="1.0" encoding="UTF-8"?>
<xs:schema xmlns:xs="http://www.w3.org/2001/XMLSchema"
xmlns:example="http://www.example.org/root"
xmlns="http://www.example.org/root"
targetNamespace="http://www.example.org/root"
elementFormDefault="qualified" attributeFormDefault="unqualified">
<xs:element name="Root">
<xs:complexType>
<xs:choice maxOccurs="unbounded">
<xs:element ref="Object" />
</xs:choice>
</xs:complexType>
<xs:key name="name_key">
<xs:selector xpath=".//example:Object" />
<xs:field xpath="@name" />
</xs:key>
<xs:keyref name="Collectiontype_defined" refer="name_key">
<xs:selector xpath=".//example:CollectionMember" />
<xs:field xpath="@type" />
</xs:keyref>
</xs:element>
<xs:element name="Members">
<xs:complexType>
<xs:group ref="example:memberTypes" minOccurs="0"
maxOccurs="unbounded" />
</xs:complexType>
</xs:element>
<xs:element name="Object">
<xs:complexType>
<xs:sequence>
<xs:element ref="Members" minOccurs="0" />
</xs:sequence>
<xs:attributeGroup ref="example:typedMemberAttributes" />
<xs:attributeGroup ref="example:namedMemberAttributes" />
</xs:complexType>
<xs:unique name="ObjectElementNameUniqueness">
<xs:selector xpath="example:Members/*" />
<xs:field xpath="@name" />
</xs:unique>
</xs:element>
<xs:element name="Collection">
<xs:complexType>
<xs:sequence>
<xs:element ref="CollectionMembers" />
</xs:sequence>
<xs:attributeGroup ref="example:namedMemberAttributes" />
</xs:complexType>
</xs:element>
<xs:element name="CollectionMembers">
<xs:complexType>
<xs:sequence>
<xs:element ref="CollectionMember" minOccurs="2"
maxOccurs="unbounded" />
</xs:sequence>
</xs:complexType>
</xs:element>
<xs:element name="CollectionMember">
<xs:complexType>
<xs:sequence>
<xs:element ref="Members" minOccurs="0"
maxOccurs="unbounded" />
</xs:sequence>
<xs:attributeGroup ref="example:typedMemberAttributes" />
<xs:attributeGroup ref="example:namedMemberAttributes" />
</xs:complexType>
</xs:element>
<xs:element name="String">
<xs:complexType>
<xs:attributeGroup ref="example:namedMemberAttributes" />
</xs:complexType>
</xs:element>
<xs:group name="memberTypes">
<xs:choice>
<xs:element ref="String" />
<xs:element ref="Collection" />
</xs:choice>
</xs:group>
<xs:attributeGroup name="namedMemberAttributes">
<xs:attribute name="name" type="xs:Name" use="required" />
</xs:attributeGroup>
<xs:attributeGroup name="typedMemberAttributes">
<xs:attribute name="type" type="xs:Name" />
</xs:attributeGroup>
</xs:schema>
-------------------- start of schema.xsd --------------------

-------------------- start of invalid.xml --------------------
<?xml version="1.0" encoding="UTF-8" standalone="no"?>
<Root xmlns="http://www.example.org/root">

<Object name="object2">
<Members>
<Collection name="Collection1">
<CollectionMembers>
<CollectionMember name="Collectionmember1" type="object1" />
<CollectionMember name="Collectionmember2" >
<Members>
<String name="string1" />
</Members>
</CollectionMember>
</CollectionMembers>
</Collection>
</Members>
</Object>
</Root>
-------------------- end of invalid.xml --------------------

-------------------- start of valid.xml --------------------
<?xml version="1.0" encoding="UTF-8" standalone="no"?>
<Root xmlns="http://www.example.org/root">

<Object name="object1">
<Members>
<String name="string1" />
</Members>
</Object>

<Object name="object2">
<Members>
<Collection name="Collection1">
<CollectionMembers>
<CollectionMember name="Collectionmember1" type="object1" />
<CollectionMember name="Collectionmember2" >
<Members>
<String name="string1" />
</Members>
</CollectionMember>
</CollectionMembers>
</Collection>
</Members>
</Object>
</Root>
-------------------- end of valid.xml --------------------

---------- END SOURCE ----------

FREQUENCY : always