I just installed the Android Eclipse Plugin and the Android SDK from Google yesterday. I open the AVD Manager window by going to Window -> Android Virtual Device Ma
I opened monitor.bat in android-sdks\tools and started the device manager there and I was able to create the AVD.
First, make sure you don't have spaces (or other illegal characters like '+','=','/',etc) in the "AVD Name" field. Spaces broke it for me.
Another thing that tripped me up: the "Name" field must be a single word and must not have spaces!
You need to open up your SDK Manager and make sure everything is installed, especially System Image. After that will be alright!