URL or path to launch is the right thing to change to about:blank.
about:blank tells Flash Builder not to do any launching but still wait for an incoming debug connection.
Ha, fantastic! Your post prompted me to go back and look at all the debug flags to see why it wasn't working. I had the debug file in Photoshop and the PlayerDebugMode set in ~/.../com.adobe.CSXS2Preferences.plist but that wasn't working. It occurred to me to check /.../com.adobe.CSXS2Preferences.plist as well, which hadn't been set. When I set that it started working for me.
I'm curious why having it in my ~/ directory didn't activate it. Is that some sort of global only setting, or is it possible I have some kind of problem elsewhere? I've noticed a number of debug related things (like which version of flash player is used) have issues when I try to do them in the user rather than globally.
Unfortunately, I know very little about CSXS panels. The photoshop forums will have more info for sure.