Hi Erel,
Sorry to be a pain but I appear to have the very same problem.
Having updated to B4A V1.9 today I'm no longer able to use the emulator with an Android V1.6 setup. I've been using B4A V1.6 until today as I've not needed any of the new features in V1.9 and I'm a big believer of the saying "if it ain't broke, don't try and fix it". Anyhow, having tried to help out a fellow B4A user which required installing V1.9 I'm now unable to run my program for Android V1.6
I've tried a complete shutdown and restart after loading the modified B4AShared.jar file into the libraries folder and I've updated the Java runtimes. Attached is the log file which I hope will be of some use (was unable to select and save the text so I'm afraid I've created it from screen shots and jiggled with it to meet file size limits :sign0137

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Kind regards,
RandomCoder