Okay, my advise at this point would be to uninstall LW and your Java completely. Then go to the official LW website and download the newest version of it (4.12.6). Do the same with the Java (using the link in my post above). Choose the JRE offline installer. Install Java, reboot and then try to install LW. If the problem re-occures, try the following. Right click the LW icon on your deskto and go to Properties>Compatibility......change the compatibility mode to Windows NT or Windows 2000 (try NT first, then the latter if it didn't work out).
Should that not do the trick, uninstall LW again, reboot in Save Mode and install LW again.
By the way, try Ewido,....you will be surprised.....I was after scanning first with AdAware and SpyBot, just to find a couple hundreds more with Ewido...

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"Never Argue With An Idiot. They Will Drag You Down To Their Level, Then Beat You With Experience"

Cool. Will try tonight and post results tomorrow.

Will also try the other spyware scanner you reccommended.