schanamolu,
Sorry that you are seeing this issue.
1. Can you please copy paste the Installation Details from MyEclipse > Installation Summary > Installation Details ?
2. Are you running any Ant processes to package or compile in any way? If yes, then make sure you are setting debug=true in your compilation task, otherwise you won’t be able to debug.
3. Can you please recheck the compiler settings from Window > Preferences > Java > Compiler > “Add line number attributes to generated class files” is checked or not.
4. Do you see this issue when trying to debug xhtml files only ? Can you please check if there are no issues with debugging java classes or jsps ?
5. Can you please try rebuilding the project and try to debug again ?
Let us know how it works for you.