I encountered the “insufficient permissions for device” problem with Ubuntu 9.10. What worked for me was:
settings->applications->development; enable USB debugging
2.on laptop (after installing Android SDK and adding 90-android.rules)
sudo ./adb start-server
./adb forward tcp:8080 tcp:8080
Change Network settings to manual proxy configuration with HTTP Proxy=localhost and Port=8080
And that worked perfectly.