I've just helped a friend with a similar problem. The j2re-1_4_0_01-fcs-linux-i386.rpm file is okay. Check that it's installed okay by typing in "rpm -q j2re" at the console. This should say what version of j2re is installed.
Right, as well as having the java RUNTIME environment installed, you also need the java DEVELOPMENT kit installed as well. Check to see you have this by typing "locate bin/java" and/or "locate jdk" at the console. You should find a directory that has the following applications: "java", "javac", "jar", "appletviewer" etc. the list goes on.
If you can't find these applications (or you think you might have older versions of these) go to
http://java.sun.com and download the latest version of java SDK.
Once you've installed this, go to your console and type "which java". Hopefully you should get the name of the newly installed "java" application ("/usr/java/jre1.3.1_02/bin/java" or something like that).
The reason (I think) you're getting the java VM type problem is because the LimeWire install script is looking for the "java" application and it can't find it.
If you can use the "java" command you should be able to install LimeWire.
Reply back if this was any help.
Iain