FlashDevelop: Unable to start java.exe: The system cannot find the file specified

1. Find the jvm.config file in /flex_sdk/bin/
2. Set java.home= to point to the Java Virtual Machine directory. For example: C:\Program Files\Java\jre1.6.0_06\bin
3. Restart all applications.

setting up flashdevelop

http://shaun.boyblack.co.za/blog/2008/03/08/getting-started-with-flashdevelop3-and-as3/