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What happens if you drag the *.jnlp file and drop it directly over the javaws.exe file (C:\Program Files\Java\jre6\bin\javaws.exe) or C:\Program Files\Java\jre7\bin\javaws.exe?
What version(s) are you installing? At least one specific version please.
Are you installing this directly on the server and the user account being used to install is the same one where the the JRE was installed?
Is there a file association with JNLP files?
When you run the command, are you using a client session from another machine or are you directly on the machine?
If you run from the command line does it start and do you see an errors?
I don't know, but suspect that there could be some issue with were the app is displayed once it is launched, or there is something about running a jnlp app from a client that is causing the runtime to fail.