Ok, thanks KEF, I have found that I needed "TBDML" instead of P&E USB... Debug now opens, but I think is having problems because the target is "secured". Not sure how to work with that...
For information, and in case anyone else has this problem, I am using the USBDM type JMxx which I purchased from a well known internet auction site... I installed the stand-alone software, and was prompted for the driver install the first time I plugged the USB device in... (Win XP)
Also made sure that the CodeWarrior patches that came with the USBDM are loaded - while the USBDM install was supposed to have loaded them, I did it again from the Start-> Programs menu, just to be certain...
Have re-loaded the code using the stand-alone programming utility but as "unsecured". The Debugger now loads, re-flashes the target and starts up ok. I can reset and re-start the target from the debugger - think that's fixed then!
Many thanks to all concerned - just have to fix my other code-loading problems now!
We can close this thread now.....