To make it the default, you just need to add a checkmark next to it in the dialog, but if it’s the only one I’m sure it already is.
Another thing that might be hanging you up is that Eclipse might be running with some dusty old VM in your windows install. Try this:
eclipse.exe -vm <path-to-jdk-1.5>\bin\javaw.exe
That will ensure you’ll run with the VM you want.