I have encountered the same issue on a new WW installation. I've got live.jar in /opt/webwork/webwork2/htdocs/applets, with owner and group set to wwadmin. Unless I comment out the findAppletCodebase line, and hard-code the correct URL and enable the next line, problems that need LiveGraphics3D fail to work correctly. With the work-around in place, all seems well.
Note: In the post to which I'm replying, it seems that the $ at the end of the work-around line should be a quotation mark instead.
My question is: Is the work-around suggested here still the way to go, or is a better fix now available?