Hi,
I haven't used Intelligere Flash Lite Server myself, as I prefer PyS60. Maybe there's some bug in it. Or maybe you didn't selected correct capabilities. There are whole lot of issues with native S60 servers 
Anyway, debugging PyS60 is very easy. You have many options to do debugging.
Make a simple logging function to write your debug messages to a log file (I personally use this method)
Make a remote/network logging utility. Rather than writing the log messages to file on phone, you can send them to a PC in your local network over WiFi connection
Make a file logger as mentioned above, but on the same device. Create a log viewer PyS60 app, which automatically re-reads the log file and shows it in readable way on regular intervals
Maybe there could be more ideas on internet for effectively debugging PyS60 scripts
As I mentioned, I use the first approach. I connect my device via BT to PC, and open the log file directly from the BT connected device. I've set my text editor to re-read the file if it changes, so I see the latest log messages as soon as they get write from the logger function.
Here's a sample logging function:
def log(self, mesg):
"Writes the debug.log file"
mesg = mesg + u'\n'
print mesg
f = open('e:\\myapp.log', 'a+')
f.write(mesg)
f.close()
BTW, you can debug the entire application, Flash Lite + PyS60 script on PC using Device Central and S60 SDK installed with PyS60 SDK. I used this approach, and it was quite effective to rapidly test the application in early development phase. Once my app was mature, I moved to on-device logging based debugging.
I hope this info helps you 
Best,
// chall3ng3r //