Set your JAVA_HOME variable by right-clicking your "My Computer" then select proprites then click the tab "Advanced" and finally click "enviroment variables", in the bottom of that page.
then under "System variables" click "New".
Set "Variable name:" to "JAVA_HOME".
Set "Variable value:" to your java JDK home directory, by default this is "c:\Program Files\Java\jdk1
reboot to take effect.