Since Apple forced the update to JDK 7 on Mac, old AWT applets no longer support copy/paste. For example, if you visit:
Simple AWT Textfield Example
you cann
Here is a great and very detailed walk-through to do it the official Java way using their policy tool:
http://www.shodor.org/interactivate/resources/InstructionsCopyPaste/
Here is a quick summary of the instructions: