Ah! sorry I just realized I can't put a path in that function's argument. Ok but anyways the setting up workspace option is not working either.
import arcpy
... sourceWorkspace = "C:\\Users\\tx8p90\\Desktop\\Lesson2"
... targetProjection = "C:\\Users\\tx8p90\\Desktop\\python excercise data\\Lesson1\\contourlines.shp"
... arcpy.env.workspace = sourceWorkspace
... listDataSet = arcpy.ListDatasets()
... try:
...     for x in listDataset:
...         outputDataset = sourceWorkspace + "\\projected_" + x
...         arcpy.Project_management(x, outputDataset, targetProjection)
...         print "Reprojection successful"
... except:
...     print arcpy.GetMessages()
...     print "failed"
What could be the problem then?