So, it would appear that the problem is being caused by my Avast Firewall which was blocking the operation of the link to the PEmicro probe. The progress display would get "stuck" at 61% for a few minutes before it would establish a connection. During this time I had attempted to start the debugger again hence the error message that I originally reported.
For whatever reason, I can't figure out how to configure the Avast Firewall to ignore the "pegbdserver_console.exe" other than completely switching the whole firewall off! I am sure that I have seen this issue reported on the P&Emicro website, but can't seem to find it.