ICD2 works great as a debugger tool with ASM code from within MPLAB. Besides it was designed for this purpose. You cannot debug at PicBasic level your code because it is compiled and the produced asm file has nothing to do with the commands in Basic.

On the other hand the Microcode ICD can debug your Basic code by inserting extra commands (increasing the size of your hex code...) and displaying the variables you want on screen through serial connection. This means that your PIC must have USART and dedicate this 2 pins Tx and Rx to the Debuger.

Ioannis