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I installed all necessary softwares but I don't have file j2sdk1.4.2 or anything like that on c disk... Did I something wrong or should i type something else in Variable Values?
http://wso2.org/project/wsas/java/2.0/d ... -home.html

Oh and should I delete nightly files or will I still need them?

did you read where it says:

Let us assume it is installed in the folder "C:/j2sdk1.4.2"

that means is just a example, so ofc you need to use the path of your jdk version.