The way I just did it was by copy pasting the library project in the root of your project (not using android studio, this gives a 'cannot create class-file error', but just using the file manager of your operating system. When using android studio for this it didn't copy some of the files).
Then mark the java folder of the library project as 'source root' (right mouse on the folder).
Then to settings.gradle add your lib project like this:
include ':youApp', ':yourLibrary'
then to build.gradle of yourApp add dependancy:
dependencies { compile project(':yourLibrary') }
Now rebuild your project.
Now add a function of the library project (showing red) when you click on it and press Alt-Enter it should say "add dependancy on module yourAppProject"