Do you have Realtek sound chip on your PC? Try to disable it in windows device manager and try again. This is most common issue in the behaviour mentioned. Also please refer to %temp%\epocwind.out for emulator log. Reasons of failures and panics can be found there.
EDIT: Regarding on-device debugging:
- Connect phone to your computer with USB cable.
- You should have Nokia Ovi Suite or Nokia PC Suite installed, because you gonna need USB drivers for the phone;
- Then go to Carbide, select debug target (GCCE UDEB) and click "Debug".
- In the opened window titled "Debug As" select "Symbian OS Phone or Simulator launch";
- In next form click button "Change" in "Connect to device" section;
- Add new connection;
- In the new connection form, go to "Install Remote Agents" tab, select Nokia -> 9.2 -> Application TRK 3.2.8 and click "Install";
- Then return to "Setup Connection" tab, choose connection type USB and then select virtual COM port allocated for phone USB connection.
- You can make sure that connection is ok by going to "Test Connection" tab, selecting TRK and clicking "Initiate Service Testing".
Connection should be set up for now, so now you can setup the build of SIS file, which should be deployed to the phone for debugging purposes. For this, in the opened window "New Launch Configuration Wizard" click button "Change" in "Debug process" section, and then, in "Deploy method" section select your SIS file in "SIS file to install" combo box. If you don't have any SIS files yet, refer to