The first thing you should check is whether USB networking is enabled in the first place - this would be the case if your Kindle shows up on your PC as a mass storage device when plugging it it.
What message is printed to your screen if you open KUAL, select "USBNetwork" and press "USBNetwork Status"? If it's something like "USBNetwork: disabled (usbms, sshd down)", press "Toggle USBNetwork".
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