While doing promoted testing, I found this issue on win2k machine. After that I could reproduce this issue again on the same m/c again. I did installation and uninstallation of JDK and JRE many times (4-5 times). I saw this issue.

1) Jre is installed on the win 2k machine (Java -version shows correct version)

2.) Open the IE and try to launch any applet. You will get message to download the JVM.

When i saw this issue first time, I change the new plugin to old plugin using JCP. After that everything works fine even you revert back to new plugin. After that I could reproduce this issue after several attempts only. So, this time I have not change the plugin and leaving this machine for more investigations.

Machine name - jdsn8. If need more details abt machine plz email me.