Using "Set Arguments..." from the "Build" drop-down menu, 
if the argument has spaces you are supposed to put quotes 
around it.  Netbeans is replacing the " with \" (shown in 
Properties > Execution > Arguments).  The result is that 
the arguments aren't passed properly at all during 
execution/debugging.

For example, adding a property of
"-logfile=C:\My Path\My File.txt"
Ends up as:
\"-logfile=C:\My Path\My File.txt\"
and gets sent to the JVM as:
"\"-logfile=C:\My" "Path\My" "File.txt\""