The application opening in that manner is controlled through app paths. Fortunately App-V 5 makes them very easy. Open up your deployment XML, and look for the following:
<AppPaths Enabled="true">
<Extensions>
<Extension Category="AppV.AppPath">
<AppPath>
<Name>javaws.exe</Name>
<ApplicationPath>[{ProgramFilesX86}]\Java\jre6\bin\javaws.exe</ApplicationPath>
<PATHEnvironmentVariablePrefix>[{ProgramFilesX86}]\Java\jre6\bin</PATHEnvironmentVariablePrefix>
<ApplicationId>[{ProgramFilesX86}]\Java\jre6\bin\javaws.exe</ApplicationId>
</AppPath>
</Extension>
</Extensions>
</AppPaths>
This snippet was taken from a Java package. In the first line, change the true to a false to disable the app paths for the package, or you could delete just the sections you want.
App-V 5 publishes the app paths information onto the physical machines registry which is why doing a run for excel opens the virtual one (since it was put down last)
