I have run this test case with XP and 2K both. The issues is seen with both the OS.
How to reproduce.

1.) Install 6u12 b02

2.) set the Update
[HKEY_LOCAL_MACHINE\SOFTWARE\JavaSoft\Java Update\Policy]
"UpdateServletURL"="http://sqindia.india.sun.com/disk17/deployment/pg152891/PIPTest/map.xml"

3.) Now goto JCP and to a Manual update

4.) Clcik on install button in update notification dialog

5.) It will show the file in use dialog ( See attached image - FIUDLG_JCP.jpg)

Now cancel the process and do uninstallation from Add/Remove program. It will show another dialog as shown in the attachment (FIUDLG_JCP_AddRemove.jpg) . And if you click Ignore button it will again bring the FIUDLG_JCP.jpg).
I guess we should have only "FIUDLG_JCP.jpg" version of dialog for "File In Use Dailog"