FULL PRODUCT VERSION :
JRE 7 update 4. this happens with IE8 and also firefox 10.0.2 ESR

FULL OS VERSION :
SP1, 64bit

BROWSER VERSION:
Internet Explorer 8

APPLET URL:
http://java.com/en/download/testjava.jsp

USER-AGENT :
Mozilla/5.0 (Windows NT 6.1; WOW64; rv:10.0.2) Gecko/20100101 Firefox/10.0.2

A DESCRIPTION OF THE PROBLEM :
I am in a corporate environment using a proxy server. I have recently installed JRE 7 update 4 on a PC, and noticed that any java applet i visit requests proxy authentication. this never used to happen with JRE 6. also, i've noticed that regardless of whether i put in a correct set of credentials or if I cancel the auth window, the applet seems to correctly load. I assume it is correctly using NTLM at this point? Is there some way i can suppress this proxy auth window?
Issue also seen on this forum:
http://stackoverflow.com/questions/10913359/java-applet-in-browser-not-working-with-java-1-7

Some of text from forum:
    I have a few problems while getting started my Soundrecorder-applet in a browser (Firefox, Safari, Chrome...) I was able to isolate the problem as far discribed below:

Problem:
Works with 6u32

Installed java version: 7u4
Compiled java version (applet): 6u32 OR 7u4
Result: The applet does NOT work on following OS's: Windows, Linux, OS x under Safari, Chrome and Firefox.