I may be completely off base here, but check the internet options that are set 
in windows7 for IE (Tools - Internet Options; or from the control panel).

That it starts Java and then hangs sounds suspiciously like *some* option is 
(for security reasons) now turned off with Windows7 by default and you have 
turn it on again to make the HMC interface usable. You will need admin rights 
to even *see* those options, though.

These days a lot of websites (including IBMs) are NOT security-conscious and 
*expect* options to be turned on that I have turned off because it allows  
activeX controls to run unchecked. And I experience the same 
mysterious 'hang' then (or garbled output). I have learned to avoid those 
websites.

best regards, Barbara

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