Nomad,
Yes, we are still working on the browser. We currently have a beta build in testing based on Mozilla 0.9.9 code.
K-Meleon has and continues to support Flash. I tested Flash 6 in the latest beta builds and it works great. See this doc to get Flash to work with the current 0.6 release:
http://kmeleon.sourceforge.net/docs/flash.php
K-Meleon does not supply its own Java machine. That is provided by JRE 1.3.x or 1.4.x from Sun. JRE does work with K-Meleon. If you have specific problems, please post them to the Bugs section of the Forum so that we can assist.
Andrew