Mike,
I don't think there's any general suppression of Java just because the browser control is embedded in a LabVIEW panel. For instance, here's a Java-based calculator that works fine for me when I fire it up in an embedded browser control in LabVIEW 7.1:
http://java.dir.bg/java_applets/utilities/calculator/
Two thoughts:
1. Are you passing the error cluster faithfully along in your VI? Is it possible that some error occurred upstream of the Navigate2 Invoke Node?
2. If you suspect a problem with the IE control, you could troubleshoot by testing with an alternative Web browser control. I found a good Mozilla-based ActiveX browser control a little while back. It requires that Mozilla be installed in conjunction with its use, but it was designed as a drop-in replacement for the Microsoft Web Browser control, so it would be a good test for you:
http://www.iol.ie/~locka/mozilla/control.htm
Best of luck,
John