Per Erich Styger's instructions I downloaded the latest ARM GCC tools from Launch Pad and created a symbolic link from /Applications/KDS_3.0.0/Contents/toolchain to them. This is on OS X El Capitan.
I also upgraded to the latest JLink tools and linked its JLink directory to <KDS_HOME>/segger.
Under these conditions I can use .../toolchain/bin/arm-none-eabi-gdb to connect to .../segger/JLinkGDBServer when both are launched from the command line. I can load my test ELF file and step through its simple loop.
From KDS this process hangs. It just says "configuring GDB aborting configuring GDB".
I exited KDS and had to kill the KDS process from the command line. I launched KDS again and specified a path for the GDB server log file. The output showed that it correctly attaches to the target (FRDM 64 board) and was listening on the expected TCP/IP ports. I tried to connect using arm-none-eabi-gdb but this timed out.
I also tried the other way round: I launched GDB server from the command line and told KDS not to launch GDB server. When I ran the debugger it got 99 or 100% and hung as usual but I did not see any connection in the server's output.
Everything works just fine with the original install. Any ideas?