You can be excused for being confused, because the rules here seem totally devoid of reason = at any rate, I've never found any logic that enables me to remember them without looking them up. You need a good XML Schema book constantly by your side.
complexType can *either* contain complexContent/simpleContent, or it can contain the content model directly (sequence/choice/attribute etc). If you specify complexContent, then it must be immediately within the complexType, you can't have sequence in between as in your specimen.
In other words, put the xs:sequence and the xs:element inside the xs:complexContent.
Michael Kay
http://www.saxonica.com/
Author, XSLT Programmer's Reference and XPath 2.0 Programmer's Reference