I had similar problems, and after I returned the path / java _home / java install (eventually sent to c: \ java), I got the error "no logservice loaded".
(by the way, the file 'run.bat' has a line that has this code:
start cmd /v:on /c "java.exe"
remove "start" and the window will stop disappearing on error.)
I also installed JDE 7 from RIM, and the MDS installed there worked fine. So I renamed the MDS folder in the Eclipse plugin and copied the MDS folder from under JDE to the plugin folder. Now it works great. Sometimes I have to close the simulator manually.
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