The app builds OK, but there is no app transferred to the emulator. Can you help? here is the trace
Is the Java version you have installed Sun's or Open Java? You need Sun's 1.6 release 10 or above (but not 1.7)
In the trace it looks like the .apk (the Android binary created by Titanium) is not being installed to the emulator because Titanium Developer can't attach to the emulator thread. The message that the app is installed and running is erroneous in this case. Try hitting the launch button again in Developer to retry deploying the .apk.
If that doesn't work, I would be suspicious of permissions setup that would prevent the Titanium Developer process from communicating with the emulator process.
In the project's build/android directory, there are subdirectories called bin, lib, src etc. Delete all the contents of all of them. Then try launching the app again.
FIXED: I was using the wrong emulator/Titanium was starting up the wrong emulator.
If I create a new AVD manually called titanium_1_HVGA and assign it Google APIs level 4, then titanium will start up that emulator instead of creating a new instance. I could then successfully run a new HellowWorld app in that emulator.
However, KitchenSink still wouldn't work due to an internal Java error. I fixed this by editing bulder.py and changing Xmx option to 1024m, as discussed here: http://developer.appcelerator.com/question/54651/error-compiling-kitchensink-to-android-emulator