Let's see, first of all this is a standard beginner's problem, but it's been a while since I've dealt with it.

First of all, applets only work in some browsers when you use an http: URL, not "file:". Next, localhost is always IP address 127.0.0.1. The URL you give for the Web page must refer to the same host as the CODEBASE in the Applet tag. If you are using a test page, look at the Applet tag in the page, and use the same hostname in the URL for the page itself.

Hopefully these are the right instructions.