First, I've seen adobe suggest that you remove/uninstall all
earlier flash player installations. I noticed multiple installs
hanging around after all of my re-installing different versions,
one of which gave me a bit of a hassle, but after removing an older
player and an incorrect debug version I re-booted, went back in and
uninstalled the stubborn player just fine. re-booted again, then
installed the lastest debug version at..
http://www.adobe.com/support/flashplayer/downloads.html
But for me, the ultimate hurdle was configuring my firewall.
A step I stumbled across during a re-installation of Flex Builder
after I'd rolled my system back.
I'm more of an actionscript designer than I am a developer so
I'm learning along the way but from what I can gather, when I was
being asked "where is the debugger or host application running?"
,It was asking because I had disabled the connection by blocking it
with Nortons. All parts were in place, just mis-configured.
I believe that I was blocking the necessary connection from
my local host to my player/IE7.
Since re-installing and choosing to allow connections I've
been fine.
Hope that helps.