Sometime, a picture is worth a thousand words. This one says it all. In other words, when it does not works as expected, "the problem is most likely between the chair and the keyborad", another version of R.T.F.M.
I have recently learned a quick and lazy way to change the version of the JDK used to run JDeveloper 10g R3. I am sure there is an option somewhere in the configuration screen to do the same, which I couldn't find...
While JDeveloper is not running, locate the embedded JDK on disk and rename (or delete) that directory. For me, it was C:\opt\jdev\jdk. Once it's done, restart and you will by asked to locate the version of the JDK you want to use.
It's another step to get going with JAVA on Vista.