Note that the J2SDK will probably work "out-of-the-box", without adjusting any system environment variables.
That said, I like to set the JAVA_HOME environment variable to refer to the home directory of the J2SDK installation, as some other apps that use
Java (such as
Tomcat) like it to be set.
I also like to set the CLASSPATH to assure that it includes the current working directory, denoted by a dot - "." .
I also like to set the PATH to include %JAVA_HOME%/bin on Windows and $JAVA_HOME/bin on Linux. This way, I can easily invoke the Java compiler and the JRE from any working directory at the command line.
If you're asking about the details of how to set an environment variable in Windows 2000, take a look at
our wiki page on how to set the CLASSPATH.