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I have out of box jBoss 5.0.0 Beta2 installation. My Java home is set to JDK 1.4
You need to have JDK 5 for this version of JBoss.
Solved...Thanks for the help...
Just to add to your comments. For any JBoss version open run.jar (in bin directory). This jar has a file called version.properties which gives you information on minimum java version required etc.