OK - that's the first hurddle. We need to get the local host fixed. The 503 error can have different causes and is usually due to an improper shutdown or db corruption that gets things messed up.
Just uninstall all instances of Java through Control Panel/Programs and features, then do the same for Subsonic, then delete the C:\Subsonic directory for a complete uninstall.
Then got to
http://www.java.com/en/download/manual.jsp and install the 32-bit Windows Java. You only need to install the 64-bit Java if you use the 64-bit version of IE, but I always install it in case anyone uses it.
Once you have Java properly installed, then go to
http://sourceforge.net/projects/subsonic/files/ and reinstall the 4.7-setup.exe - I know this sounds like a lot of work, but it should be familiar territory and only takes about ten mins.
Once installed test to see if the local host responds.