You will be happier if you put the Java files into src/main/java… that’s where everyone (including gradle or maven) will expect them to be by default. That is why gradle isn’t compiling them because you’d have to tell gradle where to find them. (It is looking in src/main/java which is basically the defacto standard now.)
…it can be reconfigured but the question is why swim against the stream. There is actually a very good organizational reason for src/main/java.
Regarding the other, you can just remove the inclusion of the application plugin and then remove everything associated with mainClass, jvmArgs, etc…
If you include the maven plugin then you can run gradle install to install it in your local maven repo and make it available as a regular dependency to any other local project. It’s also a nice early step on the path to getting uploaded to jcenter.
You would be better off adding assets.jar support as I’ve included in my example project and at least 3 or 4 other threads here.
Edit:… but anyway src\main\resources is actually fine for a library and they should then already be in your jar and ready to go. assets.jar is better for apps… so maybe ignore my statement above.
If you ran maven install then it is already in your local maven repo. Just include a dependency in the other project and make sure that mavenLocal() is in your repo list in that project.