When consumers update JRE from an older version say 1.4.2 or 1.5.0_04 to the current and latest version 1.5.0_05, applets fail to run entirely with Internet Explorer and Firefox/Mozilla browser. The applet fails to load and a General Exception error dialog is seen.

Case scenario:
Updated to 5.0u5 from Java update notification button or from http://java.com/en/download/index.jsp
Installation is complete and successful. (Install log attached as install.log file). Ensured that browsers are enabled completely to run Java applets from the web. Tested the installation through test vm applet at:
http://javaweb.sfbay.sun.com/~kc146510/test/testvm.html gave exception (screen shot attached)
tried java.com testvm applet at:
http://java.com/en/download/help/testvm.xml
tried yahoo bounce out applet. All tests fail with the same error message dialog.

On saving and loading the applet locally, it succeeded as expected.


Java Console Information:
Java Plug-in 1.5.0_05
Using JRE version 1.5.0_05 Java HotSpot(TM) Client VM
User home directory = D:\Documents and Settings\ps148196
network: Loading user-defined proxy configuration ...
network: Proxy list: webcache.japan.sun.com:8080
network: Proxy override: null
network: Done.
network: Loading manual proxy configuration ...
network: Done.
network: Proxy Configuration: Manual Configuration
     Proxy: http=webcache.japan.sun.com:8080,https=webcache.japan.sun.com:8080,ftp=webcache.japan.sun.com:8080,gopher=webcache.japan.sun.com:8080
     Proxy Overrides:

basic: Cache is enabled
basic: Location: D:\Documents and Settings\ps148196\Application Data\Sun\Java\Deployment\cache\javapi\v1.0
basic: Maximum size: unlimited
basic: Compression level: 0

----------------------------------------------------
c: clear console window
f: finalize objects on finalization queue
g: garbage collect
h: display this help message
l: dump classloader list
m: print memory usage
o: trigger logging
p: reload proxy configuration
q: hide console
r: reload policy configuration
s: dump system and deployment properties
t: dump thread list
v: dump thread stack
x: clear classloader cache
0-5: set trace level to <n>
----------------------------------------------------

basic: Registered modality listener
liveconnect: Invoking JS method: document
liveconnect: Invoking JS method: URL
basic: Referencing classloader: sun.plugin.ClassLoaderInfo@126e85f, refcount=1
basic: Added progress listener: sun.plugin.util.GrayBoxPainter@1006d75
basic: Loading applet ...
basic: Initializing applet ...
basic: Starting applet ...
network: Connecting http://java.com/applet/testvm.class with proxy=HTTP @ webcache.japan.sun.com:8080
network: Connecting http://java.com/applet/testvm/class.class with proxy=HTTP @ webcache.japan.sun.com:8080
load: class testvm.class not found.
java.lang.ClassNotFoundException: testvm.class
    at sun.applet.AppletClassLoader.findClass(Unknown Source)
    at java.lang.ClassLoader.loadClass(Unknown Source)
    at sun.applet.AppletClassLoader.loadClass(Unknown Source)
    at java.lang.ClassLoader.loadClass(Unknown Source)
    at sun.applet.AppletClassLoader.loadCode(Unknown Source)
    at sun.applet.AppletPanel.createApplet(Unknown Source)
    at sun.plugin.AppletViewer.createApplet(Unknown Source)
    at sun.applet.AppletPanel.runLoader(Unknown Source)
    at sun.applet.AppletPanel.run(Unknown Source)
    at java.lang.Thread.run(Unknown Source)
Caused by: java.io.IOException: open HTTP connection failed.
    at sun.applet.AppletClassLoader.getBytes(Unknown Source)
    at sun.applet.AppletClassLoader.access$100(Unknown Source)
    at sun.applet.AppletClassLoader$1.run(Unknown Source)
    at java.security.AccessController.doPrivileged(Native Method)
    ... 10 more
basic: Exception: java.lang.ClassNotFoundException: testvm.class
java.lang.ClassNotFoundException: testvm.class
    at sun.applet.AppletClassLoader.findClass(Unknown Source)
    at java.lang.ClassLoader.loadClass(Unknown Source)
    at sun.applet.AppletClassLoader.loadClass(Unknown Source)
    at java.lang.ClassLoader.loadClass(Unknown Source)
    at sun.applet.AppletClassLoader.loadCode(Unknown Source)
    at sun.applet.AppletPanel.createApplet(Unknown Source)
    at sun.plugin.AppletViewer.createApplet(Unknown Source)
    at sun.applet.AppletPanel.runLoader(Unknown Source)
    at sun.applet.AppletPanel.run(Unknown Source)
    at java.lang.Thread.run(Unknown Source)
Caused by: java.io.IOException: open HTTP connection failed.
    at sun.applet.AppletClassLoader.getBytes(Unknown Source)
    at sun.applet.AppletClassLoader.access$100(Unknown Source)
    at sun.applet.AppletClassLoader$1.run(Unknown Source)
    at java.security.AccessController.doPrivileged(Native Method)
    ... 10 more
basic: Modality pushed
basic: Modality popped
basic: Modality pushed
basic: Modality popped

----------------------------------------------------------------------------------------------------------

EXPECTED VERSUS ACTUAL BEHAVIOR
Expected:
After JRE is installed successfully, and browsers are enabled for Java Plug-in under normal behavior applets should run without failure.

Actual:
Applets fails to run after doing all the necessary steps.

------------------------------------------------------------
Useful Information:
If you uninstall 5.0u5 and install version from 1.4.2 series, say 1.4.2_09, everything works fine including able to run test vm applet from:
http://java.com/en/download/help/testvm.xml