If you’ve tried using the Java Plugin to test your Applets and got a mysterious “Security Exception,” then you’ve run into a known, but unadvertised bug. For a complete description of the bug, see: http://developer.java.sun.com/developer/bugParade/bugs/4343399.html.
The bug occurs when you attempt to load an Applet that lies in your Classpath. To get around this, simply set the Classpath of the Java Plugin to “.;” (without the quotes, of course). To do this, open the Plugin customization window from the Control Panel (on a Windows system), and set the classpath in the Java Run Time Parameters text box.