Hi, Welcome to CocoonTech and the Elk club!
Ok, first basic hardware config. I assume you have the EZ8 with the EZ8MSI and the XEP is hooked to the MSI 232 port. It sounds like the IP is set correctly if you can get it from the Virtual Keypad, but are you using DHCP or Static IP? When in RP can you connect to the controller via Network (IP)? If you can and can access functions in the comtroller such as the Status page then at least the hardware and network part are probably ok and can be eliminated as problem.
Assuming all the above is ok then I guess you are running the Virtual Keypad on a pc. You said you have the latest Java version, what version is it? I am running Java 2 Version 1.5.0 (build 1.5.0_04-b05). Are you running IE and what version? So you enter the IP Addr of the XEP into the browser and you get promped for User Name and Password. Does it get past that and start loading Java and then says 'Establishing Secure Connection'? Do you get the 'Welcome to the M1' screen where you enter your user code? When you enter your code and click connect is that when it goes to hourglass before bringing up security screen? If you are having a problem in these last few steps I'm going to guess its an issue with your browser or Java as you are just accessing the Virtual Keypad (web server) in the XEP. If you have another PC or laptop you may want to try it from there to eliminate any browser or Java problem.
As another test, can you run the
ElkRM software?