Because its trying to find java but its looking in the wrong place edit the run.bat by right clicking then editing it to were your java is, it tells you what to do. if you have Windows 7 x64 then just replace it with mine!

@echo off

rem If you have a custom path to java, change auto below to
rem point to your java.exe file
rem eg:  set JAVA6="C:\MyPath\bin\java.exe"

set JAVA6="auto"

set X86="%ProgramFiles(x86)%"
if %JAVA6% == "auto" (
  echo Autodetecting java
  if %X86% NEQ "" (
    echo Testing x86 folder
    for /D %%j in ("%ProgramFiles(x86)%\jre6*" "%ProgramFiles(x86)%\jre1.6.*" "%ProgramFiles(x86)%\jdk1.6.*" "%ProgramFiles(x86)%\Java\jre6*" "%ProgramFiles(x86)%\Java\jre1.6.*" "%ProgramFiles(x86)%\Java\jdk1.6.*") do (
      echo Checking %%j folder
      if exist "%%j\bin\java.exe" (
        echo Found java in %%j folder
        set JAVA6="%%j\bin\java.exe"
      )
    )
  ) else (
    echo Testing default folder
    if defined ProgramFiles (
    for /D %%j in ("%ProgramFiles%\jre6*" "%ProgramFiles%\jre1.6.*" "%ProgramFiles%\jdk1.6.*" "%ProgramFiles%\Java\jre6*" "%ProgramFiles%\Java\jre1.6.*" "%ProgramFiles%\Java\jdk1.6.*") do (
        echo Checking %%j folder
        if exist "%%j\bin\java.exe" (
          echo Found java in %%j folder
          set JAVA6="%%j\bin\java.exe"
        )
      )
    )
  )
)

:rerun
if %JAVA6% == "auto" (
  echo ERROR: 32-bit Java 6 not found!
  echo Please download and install from java.com
  pause
  exit
) else (
  echo Starting java from %JAVA6%
  %JAVA6% -classpath skin;lib\jinput.jar;lib\lwjgl.jar;lib\lwjgl_util.jar;lib\wom.jar;lib\minecraft.jar -Djava.library.path=native\windows -Dsun.java2d.noddraw=true -Dsun.awt.noerasebackground=true -Dsun.java2d.d3d=false -Dsun.java2d.opengl=false -Dsun.java2d.pmoffscreen=false -Xmx800M Main

  if errorlevel 11 (
    if not exist lib\minecraft.jar (
      echo ========================================
      echo Warning: lib\minecraft.jar not found.
      echo Did you read instructions / download it?
      echo ========================================
    )

    echo ERROR: Failed to run minecraft
    echo JAVA6=%JAVA6%
    pause
    exit
  )

  if errorlevel 10 (
    goto rerun
  )

  if errorlevel 1 (
    if not exist lib\minecraft.jar (
      echo ========================================
      echo Warning: lib\minecraft.jar not found.
      echo Did you read instructions / download it?
      echo ========================================
    )

    echo ERROR: Failed to run minecraft
    echo JAVA6=%JAVA6%
    pause
    exit
  )
)