I need to develop an interior designing software :)
Much like a virtual room designing software.
There will be pre-designed 3D objects and they can dragged on to the room. You can change the room size etc... Much like a conventional home designing software :) After the room is designed i should be able to to make the user walk through it...
I know that is a lot of requirements...
But are there any open source IDE's/API's/Engines that can i use to achieve similar results?
What you need to use depends on the level of realism you want to achieve.
For a simple(ish) start, try Google Sketchup - there is a vast array of samples online: http://sketchup.google.com/3dwarehouse/
For something more powerful (and complicated to use), try Blender
You'll then need to use an API to render and allow user movement - for this, take a look at JMonkeyEngine
FYI - There is a more complete list of modeling apps on the jMonkeyEngine site.