Make sure you have the latest video drivers installed.
yeah i think i do, i installed the latest ones by Intel.
I ran the flat text demo and it worked,
the 3d text demo crashes 
It could be that the graphics card doesnt support some openGL extensions???
Sometimes I get such crashes when there is a mix of vertex arrays and VBO.
I tried the same 3d text demo on Jme1 and it worked,
is the jme1 relatively complete? or is it lacking important features?
jme2 just got updated to the newest lwjgl, did you try with this new version?
I'd say jme1 is pretty complete, you can see a (incomplete) changelog here:
http://www.jmonkeyengine.com/wiki/doku.php?id=jme_changelog
I installed it on april 19th the latest lwjgl was added after that date?
to install the latest lwjgl do I just use svn to update the repository?
http://code.google.com/p/jmonkeyengine/source/detail?r=4287
36 hours ago 
Just update yes, and set the native library path to the correct path.
before it was lwjgl/native/win32, now its lwjgl/native/windows