Hi Martin,
I am not using an evaluation board. This is a simple breakout board of my own design as a first prototype for a university capstone project. It's not my first board design, but it is entirely possible I did something wrong with the board design such as not supplying enough current..... I'm currently supplying 200 mA each on the 1.3V and 3.3V supplies and up to 1.5A on the 5V. I'm using a 40 MHz crystal oscillator.
I am actually trying to enter debug from within S32DS. However, I shut those processes down, restarted S32DS and tried again. I even added a 250 ms delay into the debug settings just as Stanislav suggested. I see the same error. Below is what my debug settings look like.

Below is the micro info from the NXP invoice:

I am trying to use multi-core and I am doing all my cpu configuration on the z4 peripheral core before starting the other cores.
After taking the screen shot of the debug settings, I noticed that the port was not showing up. This persisted even if I clicked Refresh. I saw the driver load when I plugged in the USB Multilink and confirmed it was recognized in my device manager as shown below. Maybe this could be part of the problem?

Thanks,
Tom Olenk