Tested OS : Windows vista (CTP - February 2006 - Build 5308)
Tested build : JDK 5.0 u6
we can write file to local file system in a trusted Applet on XP,but it will fail on Vista. We can call the program in Java by System.getRuntime().exec() on XP, but it's forbidden to call a higher integrity object on Vista.

1.Grant applet and javaws with all permissions by modifying java.policy and javaws.policy on "Jre home/lib/security".
2.Launch http://wppc.prc:8080/vista/applet_file.html, which will create a file on local.Click "create file", and input "c:\test.test" and press "OK". the action is allowed on XP but will produce an exception on Vista.
3.Launch http://wppc.prc:8080/vista/executor.jnlp, which will run the inputed cmd by System.getRuntime().exec(). Input "c:/windows/regedit.exe" and press "OK". The action is also allowed on XP but will produce an exception on Vista.
It should give user an prompt to allow these action as Vista do. It seems we need run applet and javaws on more higher integrity level than default.
In Vista, IE runs in a special protected mode. When running plugin applets in IE, when we try to store resources into the default cache directory in the user's home, it will get redirected to another folder under the user's temporary internet files. So later if the user wants to view the cached resources via java control panel, the cache viewer will show nothing in the cache because the cached resources are not store in the default location.
This also prevents the sharing of cached resources between webstart and plugin.

Applet still runs fine in IE7.

We need to investigate and see where should we move the default cache directory when running vista.