Resolution:
1.It could be some issue with your machine's video card and JVM 1.4.2 compatibility.
  Try adding following property to designer.tra file: java.property.sun.java2d.noddraw=true

2.Check whether PCAnywhere is running.
   According to Sun Java forum, there is a known compatibility issue between Java and  PCAnywhere.
   http://forum.java.sun.com/thread.jsp?forum=30&thread=444824&tstart=0&trange=15
   After updating to latest PCAnywhere  and update win2k server with DirectX 9 one could resolve the issue.

3.Also found this from maker of pcAnywhere. In short, you should use latest patch for pcAnywhere.
http://service1.symantec.com/SUPPORT/pca.nsf/docid/2000082310421212?Open&src=ap_hot&docid=2003112109262212&nsf=pca.nsf&view=docid/2003112109262212?opendocument&src=ap_hot∏=pcanywhere&ver=11.0%20for%20windows%2098/me/nt/2000/