How to "set a breakpoint in malloc_error_break to debug"

I had the same problem with Xcode. I followed steps you gave and it didn't work. I became crazy because in every forum I saw, all clues for this problem are the one you gave. I finally saw I put a space after the malloc_error_break, I suppressed it and now it works. A dumb problem but if the solution doesn't work, be sure you haven't put any space before and after the malloc_error_break.

Hope this message will help..

Set a breakpoint on malloc_error_break() by opening the Breakpoint Navigator (View->Navigators->Show Breakpoint Navigator or ⌘8), clicking the plus button in the lower left corner, and selecting "Add Symbolic Breakpoint". In the popup that comes up, enter malloc_error_break in the Symbol field, then click Done.

EDIT: openfrog added a screenshot and indicated that he's already tried these steps without success after I posted my answer. With that edit, I'm not sure what to say. I haven't seen that fail to work myself, and indeed I always keep a breakpoint on malloc_error_break set.

I had given permissions I shouldn't have to write in some folders (especially /usr/bin/), and that caused the problem. I fixed it by opening Disk Utility and running 'Repair Disk Permissions' on the Macintosh HD disk.

In your screenshot, you didn't specify any module: try setting "libsystem_c.dylib"

I did that, and it works : breakpoint stops here (although the stacktrace often rise from some obscure system lib...)