the HTML file , class and image file all reside within the C drive of my Pc.
Does that mean all in the same directory?
Are you accessing the files through a web server, or directly from the file system? I
think that the latter should work, but I'm not certain. If you want to be certain, use a web server.
And Campbell is right - whoever makes you learn applets makes you waste your time learning obsolete stuff. You should think about changing classes, or challenging your teacher about this.