Editor hangs at Connecting dialog

I have no idea what I'm doing wrong here.

• I'm debugging T3D 1.0
• have complied a degug version of my game
• Followed the instructions in Torsion to set up the project, config, etc
• connection config is default:
• Press F5 and editor precompiles the files
• the Connecting dialog window pops up and just hangs.

All the windows are greyed out and the connect button is disabled, only the cancel button is enabled.

What am I missing?