What I did was:
set a new environment variable in the top user section.
VARIABLE NAME: JAVA_HOME
VARIABLE VALUE: set it to the installation directory of your most recent JDK.
For me it was, C:\Program Files\Java\jdk1.7.0_13
. Run SDK Manager as administrator at least once. I use windows 7. This method worked for me after a lot of research.
What I dont understand is when using 'where java' in the command prompt it still references C:\Windows\System32\java.exe
. My SDK Manager now opens when I need it so I solved my problem.