I thought that I would share a few links that i found when researching your problem with netscape and Java chat.

http://www.helpbytes.co.uk/javaproblems.php

http://www.liveworld.com/events/help/index.jsp

I also wonder what anti virus or software you use, eg Nortons can be a horrible pain in the ass for restricting things that you want to use. I wonder if at some point you got a warning box that asked about allowing a action and clicked deny, if that happened you may have accidentally blocked Java chat from working. Zone alarm uses a red stop sign to show its blocked something also. I would check for denied actions in the anti virus / internet security software you use. Double check that your pop up blocker is not on. I hope that may help you because I can guess your pretty frustrated.

Thorn, I wonder if you have a corrupt install of windows on your machine. I bet a reinstall will fix some of those issues.