I just installed new version of Android IDE today on my
D:\program file\Android
and installed java 1.5.0_6 JDK on C drive. I pointed out this path in a system environment
JAVA_HOME C:\Program Files\Java\jdk1.5.0_06\ ( user veriable)
JAVA_HOME C:\Program Files\Java\jdk1.5.0_06\jre\bin\javaw.exe ( system veriable)