Did you try rebooting? Also check in your program list in Control Panel that there is only 1 Java listed, uninstall any old ones.
Also run the Virtual Technician to see if that will fix the issue: http://mvt.mcafee.com/
If you left Java unpatched for any length of time then you've run a very severe risk of being infected by one of the BlackHole Kit exploits, which always look for out-of-date Java and Flash installations. If something's disabling your anti-virus program then you have to assume that you've been infected by some sort of malware. Java exploits can bypass AV programs, so maybe one has. You'd best download and run Stinger and see what it says.
I note that this week a security researcher has revealed yet another serious Java bug that affects all versions of Java 5, 6, and 7. If you don't really need Java you'd be a lot safer if it were uninstalled.
Instructions for disabling Java in the major browsers can be found on the US-CERT (United States Computer Emergency Readiness Team) website.