Right click on LW's desktop icon > properties > compatibility. Run in compatibility mode for XP...see if that helps.

Did you try this Java version (just in case you missed this one):
Archive: Download Java 2 Platform Standard Edition (J2SE) 5.0 Update 11
Uninstall any other Java versions before you install this one.

Did you make sure that LW was properly closed (check in Task Manager) before deleting the preferences folder?