What to do when NetBeans fails on Win XP with "IllegalStateException: Out of bounds"?

On some systems, Netbeans fails because it cannot write to the Temp directory (C:\DOCUME~1\User\LOCALS~1\Temp\.
This is a problem with Windows, even though the directory seems to behave fine from Windows explorer.
Solution: Deleting and recreating the Temp directory solves the problem.

If you have this problem, then Netbeans fails (e.g.) compilation with an IllegalStateException: Out of bounds. The real culprit can be found in the messages.log file where there are many informational exceptions: Cannot write to system temp directory (C:\DOCUME~1\User\LOKALE~1\Temp\)

Applies to: NetBeans 5.x Platforms: Win XP