Ok gang,

The fix for windows 2000 is to copy the JAVAW.EXE file to the
/winnt/system folder.

That's all

The setup program is copying the javaw.exe file twice,
once to the /program files/javasoft/jre/1.3.1/bin folder and the
/winnt/system32 folder.

The minute you copy the javaw.exe to the /winnt/system
folder it works fine.