When a newer version of Java is installed locally on the PC Firefox will launch applets with that newer version of Java even though Firefox will report that it is using the version portable version of Java both in about:plugins and the addons screen. If you launch the Java console and press s to get system properties you can see it is using the local copy. The confounds using the portable version to install Jars into the extensions or security directory. Is there any possible work arounds for this at all?
You should only use the latest version of Java for security reasons. We don't support or recommend using outdated and insecure versions of Java. If you have the latest Java installed portably, Firefox will use that.
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