Which Windows OS are you using? If you are using XP or earlier, you may need to downgrade to Java 1.6 (would need to uninstall Java 1.7 via the Add/Remove Programs control panel.) I had to do the same on my XP. For Windows 7, LW works fine with Java 1.7.

I'm not so sure the Java 1.7 available at present is the final official release, otherwise it would become the default Java download. I suspect the Java 1.7 presently available is a kind of beta version. It does not seem to have full 32 bit abilities re-added to it yet. 64 bit Java works fine and that is obviously what they were concentrating on. I read something at the Java site in reference to Java 1.7 32 bit but it was not highly informative, just suggestive that it may be lacking some abilities or contain some bugs.

If installing Java for Windows 7 or Vista, you should right-click the Java installer & choose Run as Administrator. This is necessary for LW for Windows 7 & beneficial for Vista.