Add these three lines to the Posupdater.bat file under POSSystem AFTER the line that starts ends in "MySQL Server 5.6" but before the line that starts "start javaw"
SET JRE_HOME=C:\Program Files\Java\jre7
set PATH=%JRE_HOME%\bin;%POS_HOME%\lib;%MYSQL_HOME%\bin;%PATH%;.;
set CLASSPATH=%POS_HOME%\lib\comm.jar;%PATH%;%CLASSPATH;
The file should now look like this with new lines highlighted in bold:
echo off
SET POS_HOME=C:\retailcloud\POSSystem
SET MYSQL_HOME=C:\Program Files\Mysql\MySQL Server 5.6\
SET JRE_HOME=C:\Program Files\Java\jre7
set PATH=%JRE_HOME%\bin;%POS_HOME%\lib;%MYSQL_HOME%\bin;%PATH%;.;
set CLASSPATH=%POS_HOME%\lib\comm.jar;%PATH%;%CLASSPATH;
start javaw -jar POSUPDATER.jar
Save the file with the same file name. When you run the updater, it should work as it normally would instead of giving a java error.