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Are you aware that the "latest" version is 1.7.0_10 and not _09?
Do you have Windows "administrator" privledges?
Do you have security software installed which may prevent the installation of other software?
Are you running the installation from the local machine? In other words, you say you downloaded jre-7u9-windows-i586.exe, but is it stored on the same machine or is it on a remote machine (network share or mapped drive)?
After you uninstalled all old versions did you reboot before attempting to install the new one?
Its Windows 7, not Windows 95So what does this have to do with anything? Although what you are implying is valid, there are still some cases where reboot is necessary. This is especially true for example if the Win MSI installer is not used properly and/or if a file is unreleasably locked during the installation.
The fact that files may be locked during an installation is still possible (although should be rare). The problem is less about rebooting and more about people understanding what they are doing. Some users (people running the installers) don't close all processes which might have file locks on the software they are trying to uninstall (or update). If they would just ensure that all processes which might use the JRE (e.g. browsers) were closed (double check in the task manager) before running the installer, the installer won't complain and reboot would not be necessary.