FULL PRODUCT VERSION :
java version "1.5.0_06"
Java(TM) 2 Runtime Environment, Standard Edition (build 1.5.0_06-b05)
Java HotSpot(TM) Client VM (build 1.5.0_06-b05, mixed mode, sharing)

FULL OS VERSION :
Microsoft Windows [Version 5.2.3790]
(Windows 2003 Server SP1 32-bit)

A DESCRIPTION OF THE PROBLEM :
VM start fails with:

Error occurred during initialization of VM
Could not reserve enough space for object heap
Could not create the Java virtual machine.

after having installed SP1 on Windows 2003 Server R2.

Works without problems without SP1 installed.

Without SP1:

java -Xms512m -Xmx1024m -XX:MaxPermSize=128m -version
java version "1.5.0_06"
Java(TM) 2 Runtime Environment, Standard Edition (build 1.5.0_06-b05)
Java HotSpot(TM) Client VM (build 1.5.0_06-b05, mixed mode, sharing)

With SP1:

java -Xms512m -Xmx1024m -XX:MaxPermSize=128m -version
Error occurred during initialization of VM
Could not reserve enough space for object heap
Could not create the Java virtual machine.

We have to reduce max heap and/or max perm in order to be able to start VM.

THE PROBLEM WAS REPRODUCIBLE WITH -Xint FLAG: Did not try

THE PROBLEM WAS REPRODUCIBLE WITH -server FLAG: Yes

STEPS TO FOLLOW TO REPRODUCE THE PROBLEM :
Do
java -Xms512m -Xmx1024m -XX:MaxPermSize=128m -version
on a machine with Windows 2003 Server R2 SP1.

EXPECTED VERSUS ACTUAL BEHAVIOR :
Should have the same behaviour as without SP1.
ERROR MESSAGES/STACK TRACES THAT OCCUR :
Error occurred during initialization of VM
Could not reserve enough space for object heap
Could not create the Java virtual machine.

REPRODUCIBILITY :
This bug can be reproduced always.

CUSTOMER SUBMITTED WORKAROUND :
Lower max heap or perm gen size