Use the following steps to fix the problem.
1. From the Start menu button, select Settings, then Control Panel to open the Control Panel. You should see the Java Coffee Cup logo icon in the Control Panel.
2. Double-click the icon to open the Java Control Panel.
3. In the Java Control Panel, click the Advanced tab.
4. Under Settings, click on + icon against "Default Java for browsers" item to expand.
5. Click the check box next to Internet Explorer or Mozilla family to enable the JRE for your Web browser and then click [OK]
6. Click [OK] again to close the prompted dialog.
Live Reporting shows "you must install Java" error even though Java is installed
Error: "Error:You must install Java 5.0 or greater to use Live Reporting. You can download Java from http://www.java.com
Causes of this problem:
The Java control panel is not configured to use the web browser. If the Java Runtime Environment (JRE) is already installed but Live Reporting applet does not work, you may need to enable the JRE for your web browser.
(Legacy KB ID CNC TS30536 )