Ok, I cleaned up everything starting with Samsung & did a fresh install of New PC Studio Ver 1.4.0 IL5 (got it from Samsung India site Support page for I7500).
It detects the phone and SD Card is showing correctly however it says for I5700 only option available in PC Studio is Update. Unfortunately I am behind firewall here so unable to connect to update servers. Will try again later when I go back home.
Fingers crossed hoping that I can get the 2.1 upgrade tonight !!!!