I am having the same problem.
I deleted the preferences.txt file but it had no effect.
I ran the launch4j with the debug turned on, following is the log file contents.
CmdLine: C:\Users\Mike\Downloads\arduino-1.0-windows\arduino-1.0\arduino.exe --l4j-debug
WOW64: no
Working dir: C:\Users\Mike\Downloads\arduino-1.0-windows\arduino-1.0.
Bundled JRE: java
Check launcher: C:\Users\Mike\Downloads\arduino-1.0-windows\arduino-1.0\java\bin\javaw.exe (OK)
Add classpath: lib\pde.jar
Add classpath: lib\core.jar
Add classpath: lib\jna.jar
Add classpath: lib\ecj.jar
Add classpath: lib\RXTXcomm.jar
Launcher: C:\Users\Mike\Downloads\arduino-1.0-windows\arduino-1.0\java\bin\javaw.exe
Launcher args: -Xms128m -Xmx128m -classpath "lib;C:\Users\Mike\Downloads\arduino-1.0-windows\arduino-1.0\java\lib\tools.jar;lib\pde.jar;lib\core.jar;lib\jna.jar;lib\ecj.jar;lib\RXTXcomm.jar" processing.app.Base
Args length: 195/32768 chars
Exit code: 1
Does this give you any clues?
Thanks for any help you can provide.
Mike