First i ran jre 1.5 but when i changed it to ver. 1.4.2 but still having a problem.
I'm getting this error then applet wants to start:
Java™ Plug-in: Version 1.4.2_05
Using JRE version 1.4.2_05 Java HotSpot™ Client VM
User home directory = C:\Documents and Settings\Andrius
Proxy Configuration: No proxy
----------------------------------------------------
c: clear console window
f: finalize objects on finalization queue
g: garbage collect
h: display this help message
l: dump classloader list
m: print memory usage
o: trigger logging
p: reload proxy configuration
q: hide console
r: reload policy configuration
s: dump system properties
t: dump thread list
v: dump thread stack
x: clear classloader cache
0-5: set trace level to <n>
----------------------------------------------------
java.lang.ClassFormatError: net/squiz/matrix/complexassetmap/ComplexAssetMap (Bad magic number)
at java.lang.ClassLoader.defineClass0(Native Method)
at java.lang.ClassLoader.defineClass(Unknown Source)
at java.security.SecureClassLoader.defineClass(Unknown Source)
at sun.applet.AppletClassLoader.findClass(Unknown Source)
at java.lang.ClassLoader.loadClass(Unknown Source)
at sun.applet.AppletClassLoader.loadClass(Unknown Source)
at java.lang.ClassLoader.loadClass(Unknown Source)
at sun.applet.AppletClassLoader.loadCode(Unknown Source)
at sun.applet.AppletPanel.createApplet(Unknown Source)
at sun.plugin.AppletViewer.createApplet(Unknown Source)
at sun.applet.AppletPanel.runLoader(Unknown Source)
at sun.applet.AppletPanel.run(Unknown Source)
at java.lang.Thread.run(Unknown Source)
please help 
The ClassFormatError generally occurs if the actual jar file cannot be accessed though the url of the system. Check to the file is web accessible by pasting the url that you are accessing your system with, along with the url to the file. eg for system root url http://www.mysystem.com/ try pasting:
http://www.mysystem.com/