The jpg worked and I duplicated your screen BUT I don't have RECYCLE CLASS LOADER on any tab. I can run the Island Java book viewer just fine.
Do you have the IB servers in the trusted group of your firewall? The demo app wants to make a connection on port 4000. Make sure you are not blocking that.
Never mind abt the firewall thing. I was able to use the demo after placing the ib servers in the internet group.