What worked for me follows the answer found in Murach's Android Programming. I got stuck trying to debug and tried to work it out for about 3 hours before turning to the next page (literally) where it said "Sometimes Eclipse will display a source not found message because...." (-headdesk-)
My solution was to turn on Step Filtering and add the packages that I wanted to skip when debugging. Evidently, Eclipse sometimes steps through all the source code libraries, when all you want is for it to step through your code. You can bypass this by adding the packages you want to skip to the filter. According to Murach, you kinda just do it by trial and error, starting with selecting all packages and adding them. As you continue with debugging you might find you need to add more packages to the filter.
Specific steps:
1. Turn on step filtering; click the button in the toolbar on the top that looks like this: http://i57.tinypic.com/x3iccp.png
2. Go to Window-->Preferences, then in the Preferences dialog, select Java-->Debug-->Step Filtering
3. Select all packages.
4. To add additional filters, click "Add Filter", type the name of the package with a .* at the end, and click OK. Murach recommends adding these common packages to begin:
--android.*
--com.android.*
--com.google.*
--dalvik.*
--libcore.*
--org.apache.*
So to add one of these packages, click "Add Filter", type "android.*", and click OK. I ended up having all of the following packages on my Step Filter Preferences.
android., android.app., com.android., com.google., com.ibm., com.sun., dalvik., java., javax., jrockit., libcore., org.apache., org.omg., sun., sunw.*, ((and this last one is a class, not a package)) java.lang.ClassLoader
I had "Use Step Filters" checked at the top of the dialog box, and "Step through filters" checked at the bottom. Click "Apply", then "OK" to close the dialog. It should work.
Good luck!
