MPRyan, I have an observation and some suggestions.
First, I'm afraid there are just too many things that could be amiss, whether in your setup of the Debug configuration, the project, the CFB-to-server definition, the CF server configuration, your firewall, and so on. It would be difficult to list all the things you may want to check, that perhaps either you have not configured, or not configured properly.
Second, of course you'll want to be sure to have read the CFBuilder docs (whether within the IDE or on the Adobe site's docs pages). You may find something discussed regarding any of the things above that you may have gotten wrong.
Third, I've done a recorded presentation specifically on setting up CFBuilder for debugging (http://www.carehart.org/presentations/), and I've done still others (also there) on using the debugger once you get it working.
Fourth, I also did the chapter on the debugger in the recently published CF9 Web App Construction Kit book (Volume 2), which includes both configuration, use, and troubleshooting. Better news still, that chapter is one of 3 (out of the book's 20) that are in fact available online, in PDF form. More info (and a link to the PDF) at http://www.carehart.org/blog/client/index.cfm/2010/8/15/cfbuilder_debugger_CFWACK_chapter_ online.
That said, I don't recall seeing that exact error. I document several others in the resources above, so while I can't say you'll find the exact answer to your challenge there, again you may simply find some "aha" moment where something you configured just isn't quite right for your environment. All it would take is one setting out of place to keep it all from working. But many can and have gotten it working, and it can certainly be very valuable to be able to do interactive step debugging, so for most it's worth the effort to get it working.
warning: the following 4 paragraphs may offend some readers, with a hyper-sensitivity to any form of an unsolicited commercial advertising. Common side effects include warmth of skin, redness of eyes, and itchy trigger fingers. Some may experience nausea, irritability, or a feeling of need to vomit. Consult a health care professional to discuss these risks. :-)
Last and finally, though, since you say you've messed with it for "hours", I realize you may not want to spend more time digging through docs, watching videos, etc.
If you just want the problem solved ASAP, and are willing to pay for help, I do provide troubleshooting consulting as a service, via a shared desktop session (where I am "looking over your shoulders" using Adobe Connect). We should be able to get it working in short order. I'm afraid I can't offer that help for free, though. My usual consulting (focused on CF server troubleshooting) is offered at a rate of $175/hr. But I appreciate that fixing a server problem which affects your business may be more valuable (to most) than getting their development environment working.
So I've been thinking about offering a specially priced option: $75 as a fixed price to help solve any one problem with CFBuilder (whether it took more or less than an hour, up to a max of 2 hours. If we couldn't solve it by then, there would be no charge.)
Now, I appreciate that some may feel it's wrong to have to pay to get help getting their development environment working. I can't solve that problem (the fact that such help may be needed). But I'm sure Adobe is aware of the challenges people have and may be planning to address things in CFB 2. I give away the resources above to help with common challenges and get people started, but I'm willing to offer still more help to those who want it.
I'll say as well that people have had problems similar to this going back to CF Studio in CF 4/5 (yes, there was CF debugging in that release, which we lost in 6 until its return in 8--unless one buys FusionDebug, which works in any release of CF from 6, forward.) So it's not really "new" to find it to be a challenge. Again, there are just lots of moving parts on the IDE and server ends (and sometimes communications in the middle.)
I realize some will say "but it's not this hard doing debugging in other platforms". But note that in many languages, you're debugging a program that's running literally as a standalone process, accessed only by the debugger, if not literally running within the context of the debugger. CF apps are very different: they're running on the CF server, which is a separate process from the IDE (whether on the same box or not). And in fact (this may surprise many), it's not only "your own" requests to a page that can be debugged, but in fact any request by any user (if someone outside your box could request a page on your local CF server). So there's a lot more that goes on and goes into enabling debugging of CF apps.
It's simply a somewhat complicated environment, setting it all up right. But as someone who has worked with debugging CF apps for 10 years, I've simply become attuned to the various details. I'm definitely NOT holding knowledge hostage. I give it away as mentioned above, but if someone needs help and has no aversion to paying for it (as from any provider of a service), I'm just saying I'm happy to help.
Go to Debugger Setting in Administrator and enable "Allow Line Debugging " and Debugger port which you have defined in JVM Config.
Now Click on Start Debugger Server.
Hope it will help...