Only this fixed my error:
If you are not able to launch a jnlp application after installing UFT
on you machine, Just uninstall UFT and try to launch the application
and then install UFT
I am not sure what to do when this issue is back as I didn’t really solve the issue structurally. My question is what could have made this behavior possible? During the issue phase, I was not even able to launch Java Control Panel (.cnpl) or javaws instance for any jnlp. changing the environment variables also didn’t work. Reinstalling Java also didn’t.