In the release note from 7.6.04 sp2:
Support for Oracle Java 7
In Service Pack 2, Oracle® Java® version 7 support has been provided for
BMC Remedy AR System. You can install BMC Remedy AR System 7.6.04 SP2 on the
Java 7 platform.
Basically installation of AR System failed when using 1.7 so everything was bound to fail