Fiction :
Applets can read your hard-drive, and delete files

Fact :
Any attempt by an applet to access local files will throw a SecurityException. If uncaught, the applet will crash, but no file access will occur.

The only exception to this rule is for digitally signed applets, which may be granted additional privileges. Your browser will display a dialog box, asking you if you want to accept the identity of the applet author. Choose no if unsure, and you'll always be safe.