In my IS 6.0.1 SP3 environment, the jar files were not placed in the JVM’s \jre\lib\ext folder but rather in the package’s jars\static folder (e.g. IntegrationServer\packages\PackageA\code\jars\static) and it works. The watt.server.reorderSecurityProviders setting is based on the IS6.0.1 SP3 readme.txt. As for the java.security file, the provider names are added programatically with an addProvider java service that runs during the package startup.
BTW, I removed the watt.server.reorderSecurityProviders setting in IS 6.5and the package loads completely rather than partially. Am trying another method to try to solve this, but appreciate if anyone out there have other ideas.