Tried everything. I've gotten to the point where I can compile and get .prc file, but it just doesn't work with IDE's debugger, nor it launches the compiled PRC file to the simulator or emulator.
IT ONLY WORKS ON XP.
Of course, you can just drop the compiled .prc file onto the emulator/simulator and use the stand alone debugger it comes with. But it is two extra steps -- if you have a copy of XP, then it's better to use VMWare or VirtualPC + WinXP.
I'll post more info later.
...but it's better to write apps for Android anyway...IMHO.