Web Application Designer

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Hi Gurus,

We have a new BW 7.0 installation with the latest patches(sp9) and content add-ons(UPTO BI Content 3). When i save a template on my Web Application Designer(looks great after the .net framework installation)i get the following error

E:rswadprexec:006XMLVALIDATION1

E:rswadprexec:006VALIDATION1

RSOBJS Unable to generate history entry.

But once i accept this message i see the message Template has been saved on the lower bar on the WAD.

When i press the execute button, i suppose the template will be displayed in a browser window as was the case with BW 3.5. But i get the error message that "Web Template URL for Web Template TEST could not be generated." TEST is the name of my web template. A pop window opens to the path

C:\Program Files\SAP\FrontEnd\Bw

which is the path of my Front End installation.

What am I missing here? Any settings to be done or do i need to define a portal J2ee engine for this purpose?