try first to open the xml in firefox, to check if the xml is correctly formated
then recheck the xml rules for any error or misspelling
how did you created the .jar file? the "correct" command line is "jar cvf DeploymentRuleSet.jar ruleset.xml"
the certificate is valid? test the jar file signature with "jarsigner -verify DeploymentRuleSet.jar"
Finally, confirm that you really created the %windir%/sun/java/deployment/ . Test by doing a "dir %windir%/sun/java/deployment/DeploymentRuleSet.jar"
if still fails, try reducing your ruleset.xml to the basic and in despair, try using sysinternals "procmon" to check if java is failling to readh the file and why