Signed/unsigned applets using java_arguments with values containing spaces or sometimes no values against the system property e.g. "Djava.security.manager=" fails to load using file://. Smae applets will work fine when deployed over the webserver and accessed using http One can notice that security pop-up is there for signed applets and applet works fine.
Following exception is getting thrown while trying to load them using file:// URL
java.lang.ClassNotFoundException: TestAppletRuntime because the class is not signed.
at sun.plugin2.applet.Applet2ClassLoader.newClassNotFoundException(Unknown Source)
at sun.plugin2.applet.Applet2ClassLoader.access$300(Unknown Source)
at sun.plugin2.applet.Applet2ClassLoader$1.run(Unknown Source)
at java.security.AccessController.doPrivileged(Native Method)
at sun.plugin2.applet.Applet2ClassLoader.findClass(Unknown Source)
at java.lang.ClassLoader.loadClass(Unknown Source)
at java.lang.ClassLoader.loadClass(Unknown Source)
at sun.plugin2.applet.Applet2ClassLoader.loadCode(Unknown Source)
at sun.plugin2.applet.Applet2Manager.createApplet(Unknown Source)
at sun.plugin2.applet.Applet2Manager.access$2000(Unknown Source)
at sun.plugin2.applet.Applet2Manager$AppletExecutionRunnable.run(Unknown Source)
at java.lang.Thread.run(Unknown Source)
exception

Steps to reproduce:
1) Downlaod the attched files and dump them somewhere on C: or D:
2) Try to access them using file:/ URL inside the browser.
3) If applet fails to load by throwing above mentioned exception then bug is reproduced
4) Host these applets somewhere over the webserver and try to access them using http URL. They will work fine