Installed they latest Nokia SDK 2.0...

C:\Nokia\Devices\Nokia_SDK_2_0_Java\bin>emulator.exe -Xnew
Error occurred during initialization of VM
java/lang/NoClassDefFoundError: java/lang/Object

C:\Nokia\Devices\Nokia_SDK_2_0_Java\bin>java -version
java version "1.7.0_03"
Java(TM) SE Runtime Environment (build 1.7.0_03-b05)
Java HotSpot(TM) 64-Bit Server VM (build 22.1-b02, mixed mode)

Enough said.