Please refer to 5077565 for a testcase and the problem description.
The test failed with both new and classic Java Plug-in on XP using IE browser.
The failure with the new Java Plug-in is more severe in the sense that some events are missing. For the classic Java Plug-in, the failure is that the events aren't being handled synchronously. At this point, it's unclear since which release the problem in 5077565 was re-introduced in the classic Java Plug-in.
Suspecting the failure is due to that we're pumping too many windows messages during liveconnect calls.