HT5242 When I click software update, this update does not come up. Updater says my software is up to date. Why?

Software update says, Software Update doesn’t have any new software for your computer at this time.
and this Java update has not been installed on my system. Why would that be?

Because you never installed Java. Lion does not install Java. Only the user can opt to download and install Java separately. If you don't have Java installed then you don't need the update which is why it does not appear.

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