I realized we have another wiindows machine that runs sql-developer just fine. I copied the jdk-6u25-windows-x64.exe from that machine and installed on the newer one. The install complained that a new version of java was already installed. But, the older version works where the newer one did not - does not.
So I'm good. But it would be nice to know why the new versions do not include all the foo that seems to make sql-developer work.