I don't know if it is impossible to get it working the way you are trying.
But I found that 'tools.jar' is in the MANIFEST.MF classpath of 'orion.jar'.
I guess the classes in 'orion.jar' need some classes in 'tools.jar'
immediately, even before loading 'application.xml'.
That might explain why it won't work with the library path setting...
I guess you could go as far as editing MANIFEST.MF in the 'orion.jar'
archive to match the 'tools.jar' in you JDK path.
But why would you not want to put the 'tools.jar' in the Orion directory...
(except it's size???)