Jim, the problem arises if one wants to use the BDM connector on the demoqe board to debug an external mcu on another board. To get this working one must connect the PTD3 pin on the demoqe daughter card connector to PTD3 on the other external board. Otherwise the debugger cannot get into debug mode.
So to debug the qe128 one needs VDD, VSS, BKGD and PTD3. This is not documented anywhere AFAIK.
Another thing; this only seems to be needed to get into debug mode. When the debugger is running, the pin can be disconnected and debugging keeps working until next reset.