Looks like you have the jre installed, but not the jdk. Click the "Find" button and start a find in the "C:\Program Files\Java" directory. It may appear after that but you should delete the duplicate entry for your current jre.
EDIT: java control panel is a real set of asterisks it just doesn't work properly. So instead of this hit the "browse" button from select VM and go to "C:\Program Files\Java" and there should be a directory starting with jdk.