I tried programming the device using a PE micro Universal FX cable. Following is the console log, this might give you some more info on whats happening..
Connection from "127.0.0.1" via 127.0.0.1
Connection from "127.0.0.1" via 127.0.0.1
PE-ERROR: Warning. Can't read registers while part is running.
PE-ERROR: Warning. Can't read registers while part is running.
Telnet server running on 127.0.0.1:51794
Copyright 2012 P&E Microcomputer Systems,Inc.
Command Line :C:\Freescale\KDS_3.0.0\eclipse\plugins\com.pemicro.debug.gdbjtag.pne_2.9.0.201703061630\win32\pegdbserver_console -device=NXP_KMx_KM34Z256M7 -startserver -singlesession -serverport=7224 -gdbmiport=6224 -interface=USBMULTILINK -speed=5000 -p˜
CMD>RE
Initializing.
Target has been RESET and is active.
CMD>CM C:\Freescale\KDS_3.0.0\eclipse\plugins\com.pemicro.debug.gdbjtag.pne_2.9.0.201703061630\win32\gdi\P&E\supportFiles_ARM\NXP\KMx\freescale_km34z256m7_1x32x64k_pflash.arp
Initializing.
Error loading .ARP file : C:\Freescale\KDS_3.0.0\eclipse\plugins\com.pemicro.debug.gdbjtag.pne_2.9.0.201703061630\win32\gdi\P&E\supportFiles_ARM\NXP\KMx\freescale_km34z256m7_1x32x64k_pflash.arp. Set PC and Run Error.
Error loading programming algorithm - load aborted.
Error occured during Flash programming.
PE-ERROR: Error downloading to the device.
Disconnected from "127.0.0.1" via 127.0.0.1
Disconnected from "127.0.0.1" via 127.0.0.1
Target Disconnected.
Target Disconnected.