Hi - I'm running PHP DBG Listener 3.1.7, but when I try to connect I get "DBG 3.1.6.. debugger module is called from an old or incompatible client software. it's necessary to update DBG client (dbglistener) to version 3.1.6 or higher".. which is confusing.

PHPEd - eval 4.6.1 Build 4627 (about to purchase.. if that'll help?..)
Server dbg-3.1.6-Linux.tar.gz / dbg.so-4.3.x for PHP 4.3.9 on Linux

Where could I be going wrong?

Thanks in advance for your help!

it's all right. Version of dbglistener is 3.1.7 while all modules are 3.1.6 and they do work with each other.
The problem seems in either port conflict (you pointed debugger module to wrong port or host) or you're using ssh tunnel which can't reach local dbglistener.
In the first case please proceed with http://forum.nusphere.com/tip-troubleshooting-debugger-communications-t579.html
In case of ssh tunnel check these instructions: http://forum.nusphere.com/tip-troubleshooting-debugger-communications-ssh-t581.html

Got it, tx. This post remote-debugger-for-windows-using-ssh-through-plink-exe-t2398.html?highlight=putty fixed all!