When I try to run VASSAL.sh under Ubuntu 16.10 with Java 8, I get a “command not found” error. I have rebooted since installing Java 8.
How are you running it? It should probably tell you the name of the command that wasn’t found, what does the full error say?
e.g. “bash: VASSAL.sh: command not found” would mean you’re trying to run the command VASSAL.sh with no qualifying path, but “VASSAL.sh: java: command not found” means java might be installed but not on your PATH.