I'm having the same problem, but...

I installed what I thought was Java version 1.3.1. I followed the link from LimeWire's website, and downloaded an install file named j2re-1_3_1_02-linux-i386-rpm.bin. This then decompresses to jre-1.3.1_02.i386.rpm. I installed the RPM as usual, so far so good.

When I then tried to install limewire, I got the same errors as those described in the first message of this thread. I checked the Java version as you suggested, and it returned:

Engine: Just-in-time v3 Version: 1.0.6 Java Version: 1.1

This is puzzling, since I installed the 1.3.1 RPM.

So I went back to Sun's site and downloaded 1.4.0. After I installed it, I still get the exact same problem, and java -version still returns

Engine: Just-in-time v3 Version: 1.0.6 Java Version: 1.1

What's going on here?