hi..
u have to set the home directory of ur JDK...assuming its c:\jdk1.3 just put the
following in ur autoexec.bat:
JAVA_HOME = c:\jdk1.3
hope u have also put:
TOMCAT_HOME = c:\tomcat where c:\tomcat is the root directory where of ur Tomcat files.
And regarding ur question about what a Java Interpreter is...read any basic java book
and u will find out.
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