J2SE Version (please include all output from java -version flag):
  java version "1.5.0_06"
  Java(TM) 2 Runtime Environment, Standard Edition (build 1.5.0_06-b05)
  Java HotSpot(TM) Client VM (build 1.5.0_06-b05, mixed mode, sharing)

  and java version "1.6.0-beta2"

  Java(TM) 2 Runtime Environment, Standard Edition (build 1.6.0-beta2-b73)
  Java HotSpot(TM) Client VM (build 1.6.0-beta2-b73, mixed mode, sharing)

Does this problem occur on J2SE 1.4.x or 5.0.x ? Yes / No (pick one)
  no on 1.4.x, yes on 5.0u6

Operating System Configuration Information (be specific):
   Microsoft Windows 2000 [Version 5.00.2195]

Hardware Configuration Information (be specific):
  Pentium 4

Bug Description:
  Regression: Applets fail to load

  Under this configuration (other configurations seem to work) all Applets I have tried now fail
  to load (using older JDKs they were loading before) I have found others with the same problem:

      http://forums.java.net/jive/thread.jspa?messageID=34805

For example using a Sun Applet:
http://java.com/en/download/help/testvm.xml

gives the error:
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

I 1st noticed this with build 1.6.0-beta2-b73 then went back to 1.5.0_06 and the problem was
still there. It would be nice if the Java Plug in would let us pick with JRE to use without us
needing to uninstall and reinstall each one. I tested using both Mozilla Firefox and IE and
they both have the same problem.

Firefox and JRE 1.5.0_06 trace level 5 output:
---------------------------------------------------
basic: Registered modality listener
basic: Referencing classloader: sun.plugin.ClassLoaderInfo@1bf6770, refcount=1
basic: Added progress listener: sun.plugin.util.GrayBoxPainter@1c5fde0
basic: Loading applet ...
basic: Initializing applet ...
basic: Starting applet ...
network: Connecting http://java.com/applet/testvm.class with proxy=DIRECT
network: Connecting http://java.com/applet/testvm.class with cookie
"JSESSIONID=7637A509FDD4B9C63CB7D309B680E252.tomcat2; s_cc=true;
s_sq="
network: Connecting http://java.com/applet/testvm/class.class with proxy=DIRECT
network: Connecting http://java.com/applet/testvm/class.class with
cookie "JSESSIONID=7637A509FDD4B9C63CB7D309B680E252.tomcat2;
s_cc=true; s_sq="
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


Internet Explorer and JRE 1.5.0_06 trace level 5 output:

basic: Registered modality listener
liveconnect: Invoking JS method: document
liveconnect: Invoking JS method: URL
basic: Referencing classloader: sun.plugin.ClassLoaderInfo@1db4f6f, refcount=1
basic: Added progress listener: sun.plugin.util.GrayBoxPainter@65a77f
basic: Loading applet ...
basic: Initializing applet ...
basic: Starting applet ...
network: Connecting http://java.com/applet/testvm.class with proxy=DIRECT
network: Connecting http://java.com/applet/testvm.class with cookie
"JSESSIONID=3776D4F9A1D53E6C9F225C0F2DA46281.tomcat4"
network: Connecting http://java.com/applet/testvm/class.class with proxy=DIRECT
network: Connecting http://java.com/applet/testvm/class.class with
cookie "JSESSIONID=3776D4F9A1D53E6C9F225C0F2DA46281.tomcat4"
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
test result from the appletviewer:

C:\Program Files\Java\jdk1.6.0\bin>appletviewer http://java.com/en/download/help/testvm.xml
load: class testvm.class not found.
java.lang.ClassNotFoundException: testvm.class
        at sun.applet.AppletClassLoader.findClass(AppletClassLoader.java:183)
        at java.lang.ClassLoader.loadClass(ClassLoader.java:306)
        at sun.applet.AppletClassLoader.loadClass(AppletClassLoader.java:127)
        at java.lang.ClassLoader.loadClass(ClassLoader.java:251)
        at sun.applet.AppletClassLoader.loadCode(AppletClassLoader.java:626)
        at sun.applet.AppletPanel.createApplet(AppletPanel.java:760)
        at sun.applet.AppletPanel.runLoader(AppletPanel.java:689)
        at sun.applet.AppletPanel.run(AppletPanel.java:361)
        at java.lang.Thread.run(Thread.java:626)
Caused by: java.io.IOException: open HTTP connection failed.
        at sun.applet.AppletClassLoader.getBytes(AppletClassLoader.java:286)
        at sun.applet.AppletClassLoader.access$100(AppletClassLoader.java:44)
        at sun.applet.AppletClassLoader$1.run(AppletClassLoader.java:173)
        at java.security.AccessController.doPrivileged(Native Method)
        at sun.applet.AppletClassLoader.findClass(AppletClassLoader.java:170)
        ... 8 more

C:\Program Files\Java\jdk1.6.0\bin>java -version
java version "1.6.0-beta2"
Java(TM) 2 Runtime Environment, Standard Edition (build 1.6.0-beta2-b73)
Java HotSpot(TM) Client VM (build 1.6.0-beta2-b73, mixed mode, sharing)

The applet viewer opens up and says start: applet not initialized.

As a side note I have tested on JDKs as far back as 1.4.0 and they no longer work either. Seems that something has become corrupted and so this might not be a regression. I had installed JRE build 1.6.0-beta2-b73 before the problem started to occur.

Also I have since found another applet that still works. So it isn't all Applets with the problem.

Another of the Applets that no longer works (tested on 1.5.0_06 and 1.6.0-beta2-b73) also reports java.lang.Error: java.lang.ClassNotFoundException so it would seem to be the same problem. I am sure that this other Applet is using Class.forName(...) as it is finding other classes, but not the required one which is a constructed name. This Applet was working on earlier JREs including 1.5.0_06 on this computer and is still working on JRE 1.5.0_06 on another computer.
Here is the trace from a different computer where it works fine:

Java Plug-in 1.5.0_06
Using JRE version 1.5.0_06 Java HotSpot(TM) Client VM
User home directory = C:\Documents and Settings\Yoseph Phillips
----------------------------------------------------
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: Stopping applet ...
basic: Removed progress listener: sun.plugin.util.GrayBoxPainter@aa9835
basic: Finding information ...
basic: Releasing classloader: sun.plugin.ClassLoaderInfo@1bf6770, refcount=0
basic: Caching classloader: sun.plugin.ClassLoaderInfo@1bf6770
basic: Current classloader cache size: 1
basic: Done ...
basic: Joining applet thread ...
basic: Destroying applet ...
basic: Disposing applet ...
basic: Quiting applet ...
basic: Joined applet thread ...
basic: Unregistered modality listener
basic: Registered modality listener
basic: Referencing classloader: sun.plugin.ClassLoaderInfo@1bf6770, refcount=1
basic: Added progress listener: sun.plugin.util.GrayBoxPainter@982589
basic: Loading applet ...
basic: Initializing applet ...
basic: Starting applet ...
TestVM 3.1 kc
Copyright (c) 2005 Sun Microsystems, Inc.
All Rights Reserved.
basic: Loaded image: http://java.com/en/img/download/t1.gif
basic: Loaded image: http://java.com/en/img/download/t2.gif
basic: Loaded image: http://java.com/en/img/download/t3.gif
basic: Loaded image: http://java.com/en/img/download/t4.gif
basic: Loaded image: http://java.com/en/img/download/t5.gif
basic: Loaded image: http://java.com/en/img/download/t6.gif
basic: Loaded image: http://java.com/en/img/download/t7.gif

I am a little puzzled how this helps you, but seems to be what you asked for.
I wont change this system to Mustang as I am scared about corrupting it.
This is obviously a very serious problem for me, so I'll do what you need.