Setting up remote kernel debugger with WinDbg

c:\WinDDK\7600.16385.1\Debuggers>kdsrv.exe tcp:port=60001
c:\WinDDK\7600.16385.1\Debuggers>kd -remote tcp:server=\\127.0.0.1,port=60001

DebugConnect failed, HRESULT 0x80010007  
"The callee (server [not server application]) is not available and disappeared; 
all connections are invalid. The call may have executed."

I'm using Win7 and have also set bcedit debug on and net on.

The commands you have are wrong. Take a look at the MSDN for the exact syntax. This is example of launching kdsrv:

kdsrv -t tcp:port=1027 

then the remote debugger is launched like this:

windbg -k kdsrv:server=@{tcp:server=127.0.0.42,port=1027},trans=@{com:port=com1,baud=57600}

Notice, that kdsrv.exe is only used with "3 machine setup": a debuggee, a local debugger machine and remote debugger machine. Is that what you want to accomplish? Anyways, you should just start with regular "2 machine" setup: a debuggee and a debugger. After you have this working, you can throw one more machine to your environment for remote debugging.