I too am getting this same error when trying to set up a connection in debug configure.
I also get a blank line on port select, and no refresh action.
" PE-ERROR: Unable to auto-detect debug hardware. Please specify on the command-line. Halting."
I am using Windows 7 Home Premium, new computer and first install of KDS - have tried KDS 2.0 and 1.1.1.
My FRDM-KL46Z board did load and show up properly.
I have downloaded and installed the PEMicro drivers multiple times - it seems to be installed.
Any hints would be great!