ServletExec Initialization Failed

Init failed, code = 3
java.lang.Exception: ReadServerPrefs exception: java.lang.IllegalArgumentException: Malformed \uxxxx encoding.

The JavaHome value is read from the registry. If it is not correct then edit the registry and set the keys in the following location to the correct values:

HKEY_LOCAL_MACHINE\SOFTWARE\JavaSoft

If JavaHome is correct then launch DBMON, restart the server and check for error messages in the DBMON console.