JBoss.org Community Documentation
The information below has originaly been provided by The Legion of the Bouncy Castle.
The provider can be configured as part of your environment via static registration by adding an entry to the java.security properties file (found in $JAVA_HOME/jre/lib/security/java.security, where $JAVA_HOME is the location of your JDK/JRE distribution). You'll find detailed instructions in the file but basically it comes down to adding a line:
security.provider.<n>=org.bouncycastle.jce.provider.BouncyCastleProvider
Where <n> is the preference you want the provider at.
Issues may arise if the Sun provided providers are not first.
Where you put the jar is mostly up to you, although with jdk1.4 the best (and in some cases only) place to have it is in $JAVA_HOME/jre/lib/ext. Under Windows there will normally be a JRE and a JDK install of Java if you think you have installed it correctly and it still doesn't work chances are you have added the provider to the installation not being used.