I get this strange error that stumped me, any help would be greatly appreciated:

Build Core Paths: C:\Program Files (x86)\Arduino\hardware\arduino\avr\cores\arduino
"C:\Program Files (x86)\Arduino\hardware\tools\avr/bin/avr-gcc" -w -Os -Wl,--gc-sections -mmcu=atmega2561 -o elf" cpp.o" pp.o" ion.cpp.o" .o" pp.o" o"  cpp.o" cpp.o" .o" p.o" cpp.o" .o" o" "C:\Users\Leon\AppData\Local\V.Micro\Arduino\Builds\Repetier2\3D_2561\ui.cpp.o" rial\SoftwareSerial.cpp.o" p.o" mem_check.c.o" DBG.cpp.o" "C:\Users\Leon\AppData\Local\V.Micro\Arduino\Builds\Repetier2\3D_2561/core.a" "-LC:\Users\Leon\AppData\Local\V.Micro\Arduino\Builds\Repetier2\3D_2561" -lm
core.a(HardwareSerial0.cpp.o)*:In function `__vector_25'
core.a(HardwareSerial0.cpp.o)*:In function `__vector_25'
collect2.exe*:error: ld returned 1 exit status
Error creating .elf

Thanks for the quick response. And yes, I am using a custom board based on atmega2561. However, only RX1/TX1 are used for Hardware Serial which should leave RX/TX available.
I will play with remote port settings, any ideas you may have along these lines please toss them my way. I would love to be able to use a real debugger...

I use both actually. SoftwareSerial is used for Repetier Host to communicate with my board. And HardwareSerial1 is used to communicate with yet another custom board. Used to be SPI but I wanted to simplify things. So if I understand this, I will need to setup another serial port for debugging, correct? Would an FTDI cable hooked up to some IO pins work? What do I need to do on the board, open a SoftwareSerial connection using those new IO pins?  Alternatively, is there a way for me to use a JTAGICE3 or MKII programmer for debugging?