I was having problems setting up monodevelop with Unity for the first time, and I found the answer I was looking for in this link: http://answers.unity3d.com/questions/15633/monodevelop-2-4-with-unity-3-0
The correct answer in the forementioned page is the one from "pky99": "First, under the Unity Editor, go to "Preference" then click on "External Script Editor", browse the folder where you install Unity 3. In the Unity 3 folder, you will see a folder called "MonoDevelop". Open the folder "MonoDevelop" then click on the "MonoDevelop" exe shortcut. Next press "Sync Monodevelop Project" under Assets menu. Then it will auto launch the MonoDevelop editor with the Unity Debugger.
(Note, please do not point to the actual "MonoDevelop" exe file, this will not be work for unity debugger. The unity debugger only work if you point to the "MonoDevelop" exe shortcut under Unity 3 folder)"
Aditionally, you may need to point the "Editor" field in "MonoDevelop >> Preferences >> Unity >> Debugger" to your "Unity.exe".