Can you please answer some more queries to help us investigate further :
1) Can you please share your MyEclipse installation details from MyEclipse > Installation summary > Installation details ?
2) Can you please switch to a new workspace, import your project into the new workspace and check if you can replicate the issue ?
3) Clear the contents of the .log file located at <Workspace dir>/.metadata/.log file, replicate the issue and attach the log file here.
4) Are you behind a firewall or proxy ?
5) Can you please mention on which application server you are trying to debug your application ?
Can you please check this thread which discusses the same issue and let us know if that helps in resolving your issue.
Glad that you got it working and thanks for posting your workaround which might help other users who are having trouble with this.
Let us know if you see any issues or have any further questions on MyEclipse.