I've seen this bug once time... It was caused by another software that came with its own version of the JRE, and inserted a path to some DLL of that specific JRE (1.3.1 conflicting with 1.3.1_01).

The problem was solved by removing the extra (conflicting and badly installed) JRE, and reinstalling Java separately, in its own folder, then removing all other references to other versions of Java.

I don't need, with a standard Java install, any setting for the PATH environment variable.