I find I have to edit setclasspath.bat and put JAVA_HOME in it
ie put something like set JAVA_HOME=J:\java\jdk1.4.1 at the top of the file.
(obviously you replace the path  with a jvm location of your own)
That way I do not have to mess with M$ paths etc and I can control
which jdk it runs with
This may not fix your prob, but it was necessary for me
running statup.bat from a DOS prompt  will show you the actual error