Comment 14 for bug 702797

This is the fix that I found.
Add put this line into the target box on the Sikuli icon.

"C:\Program Files (x86)\Sikuli X\Sikuli-IDE-w.bat"

Then find or create Sikuli-IDE-w.bat in the sikuli directory and copy the following into the file.

Sikuli-IDE-w.bat:

@echo off

PATH=%PATH%;%~d0%~p0libs
set JAVA_EXE="javaw"
if defined PROGRAMFILES(X86) set JAVA_EXE="%PROGRAMFILES(X86)%\Java\jre6\bin\javaw.exe"
start /B "Sikuli-IDE" %JAVA_EXE% -Xms64M -Xmx512M -Dfile.encoding=UTF-8 -Dpython.path="%~d0%~p0sikuli-script.jar/" -jar "%~d0%~p0sikuli-ide.jar" %*

I run Windows 7 x64 and Sikuli works fine for me after applying this fix.