How I fixed Xephyr.

Do not proceed until you have fixed Xephyr, it will just crash when you try to enter the web address!

You cannot install anything by default in the SDK as it thinks it is in offline mode due to not emulating WiFi or Phone mode.

Go to the application menu by clicking on the Application Menu button (on the top left corner of the screen) -> App manager -> Click on the application manager window title area -> Click "Application catalogues" ->Click "New"

Enter "matrix" as the web address, then click in the blank space above the window to cancel. It will then ask you if you want red pill (advanced mode, yes we do) or blue pill (turn advanced mode off again). Choose Red Pill.

Now click the Application Manager title again and select Settings.
Tick "Assume Net Connection" and that will allow application manager to work. You may also want to scroll down in Settings and select "Show All Packages" but I would be very careful with that as it shows a lot of stuff that can probably mess up the SDK.

Be aware, you have to enabled red pill mode every time you start/restart the SDK!

I also find the SDK REALLY buggy. I enabled support for MSN, AIM and Yahoo and it worked for a while, then locked up. When I went back in, it no longer will sign me in. Its stuck in offline even though the web browser and package manager work fine.

The only music I got to work was FLAC after adding the OGG Support package. The default music files it finds in the SDK will not play and Internet Radio does not work either. Widgets do seem to work though but there does not seem to be many of them to try.

Also FLASH does not work for the web browser as I believe that is only available compiled for ARM and the SDK will only run Hildon in i386 mode. I believe this is an issue with QEMU not supporting the Cortex A8 and Hildon presumably is optimised for that specific CPU. I hope this gets fixed later as its not much of an SDK IMO without full device emulation.