I have learned several things when setting up a development environment for Android on Windows. First and foremost, long path names and Windows access control may introduce issues for Java, Eclipse, or Android SDK. The remedy to this problem is to install Java, Eclipse, and the Android SDK to the root directory with user-created folders. The next issue is selecting which version of Java, Eclipse, and Android SDK to install. The 32-bit version of Java 1.6 or 1.7 should be installed because of an 32-bit Android driver. The regular Eclipse Classic 3.7 is sufficient for Android, but there is no harm in installing Eclipse J2EE for other projects. Google has been pretty good at installing the latest Android SDK. I choose to install SDKs for Android 2.3 and 4.x.
For example in my installation: