If I go into Window, Preferences, Adobe, RDS configuration, and I select local host followed by Test Connection, I get:
Test connection was successful.
In the ColdFusion perspective, RDS Dataview to the right shows my datasources correctly.
I double click on a line number that contains a cfif statement, and the little blue dot appears correctly.
I click on ColdFusion debugging perspective, and say "Debug as ColdFusion Application", and it says
Selected file is not in the document root.
If you do not have project in the document root of the server, you can link folder under document root in the project using Project Properties -> ColdFusion project option.
Oh wait! I think I figured it out!
(I think the wording of this error message needs a little help.)
Retrieving data ...