The MDS simulator is an important piece of the debugging puzzle. So far, you have used only the Direct TCP/IP transport in the examples that you've done. While this is the easiest to do during development and testing, it is not necessarily the best transport to use in production. It's good to use in testing because there are fewer components involved and therefore, fewer points of failure. If you can't get it to work by using Direct TCP/IP in the simulator, you most likely won't be able to get it to work using any other transports.
If you recall, using the MDS transport provides an encrypted and secure tunnel for the networking communication to travel through between your handheld to your server in your office. The MDS simulator provides that same secured tunnel between the simulator and your local machine so that you can test applications that use that tunnel.
The browser application on the simulator uses the MDS transport, which is why you can't use the browser...