I have been facing this problem for a quite long time. I was unable to run test using selenium RC 1.0.x. The problem behind this is: in the selenium server tha max version of firefox to be used is defined as 3.6. To overcome this problem, we need to override the value to the version number you want to use (in my case 4.0). Below are the step on how to do it:

1. Change the file extension of the selenium-server.jar file to .zip.
2. Now, extract the file content to any particular folder let’s say ‘selserver’.
3. Now search for all available install.rdf files. You may get 5-6 such file depending on the version.
4. Open those files with note pad. In this file you will see a tag like “<em:maxVersion>3.6.*</em:maxVersion>”. As it’s defined as 3.6, hence we need to change it to 4.0 and save the file.
5. Compress all the files again as you had decompressed them to selenium-server.zip. Change the file extension to .jar.