This is the classic "install Java and nuke your PATH variable" problem. I was just about to ask you if you had recently installed Java, and hey presto, your PATH tells me that somebody has. Twice, by the look of things.
To repair this take the following steps
1. Open Control Panel
2. Choose System
3. Click Advanced tab
4. Click Environment Variables button
5. In the lower of the two panes, scroll down until you can see the Path variable line
6. Double click the line
7. A dialog will appear with the text in the lower "variable value" box highlighted.
8. Delete all of it leaving the box blank.
9. Copy the line below and paste it in there
C:\Program Files\Java\jdk1.6.0_16\bin;C:\Windows\System32\;C:\Windows\;C:\Windows\System32\Wbem
10. Click OK, OK, OK to come right back out.
11. Reboot