Windows 2008, Vista and Windows 7 contains some enhancements of the TCP stack compared to earlier versions of Windows.
Among them, are the TCP autotuning option which by default is enabled. (For more info, see http://blogs.msdn.com/wndp/archive/2007/07/05/receive-window-auto-tuning-on-vista.aspx).
During installation of a two-server remote desktop farm, I installed Sun Java runtime, and routinely set out to test the functionality by connecting to the java.com testpage (http://www.java.com/en/download/help/testvm.xml). The test failed, leaving the java plugin window with the spinning circle.
This probleme was evident on both physical and virtual (hyper-v) servers on the network, but only on various flavours of Windows 2008, not Windows 2003 etc.
After heavy testing and a lot of google abuse searching for “applet download fail” and striking out, it dawned on me that I was looking at it from the wrong perspective. I had to be a response problem, and it had to be a delay thing. I searched for “windows 2008 applet download slow”, and came upon this page that put me on to the soluton: http://www.mydigitallife.info/2007/03/22/disable-tcp-auto-tuning-to-solve-slow-network-cannot-load-web-page-or-download-email-problems-in-vista/.
After disabling autotuning, java applets started to load normally.
This issue might also have affected other applications on the remote desktop servers, so this is not a java runtime specific issue.
Edit: In hindsight, the error was not really related to Windows 2008 R2 or autotuning. After a few months, the customers old firewall (A Linksys VPN router), died and was replaced with a new firewall. On a hunch, I decided to test java again from an unmodified server. It worked. It was the old firewall that was to blame….