While passing the following option to othervm, JTREG get confused and fails:
-Djava.util.logging.SimpleFormatter.format='%1$tF %1$tT %4$-7s %5$s %n'

Attached you can find a simple Java test to reproduce the issue.

Compile, and run from the command line as follows:
$ java -Djava.util.logging.SimpleFormatter.format='%1$tF %1$tT %4$-7s %5$s %n' BugExample
Output:
 013-05-06 14:11:34 SEVERE Hello world!

Running through JTREG, using an empty TEST.ROOT yields:

ACTION: build -- Not run. Test running...
REASON: Named class compiled on demand
TIME: ason: Named class compiled on demand seconds
messages:
command: build %1$tT
reason: Named class compiled on demand

TEST RESULT: Error. Can't find source file: %1$tT.java in directory-list:



As you can see it, JTREG is trying to find the file %1$tT, which is part of the formatting string that I'm trying to pass to the VM.