How do I get SQL Server Management Studio to stop processing on an error?

Short answer: You can't.

Thanks to those that provided workarounds, but it seems that SSMS itself can not be set to pause or stop on an error in the same way that Toad for SQL Server can.

consider using the command line program 'sqlcmd' that comes with SQL Server, with the -b and the -V options set. -b will cause sqlcmd to quit when it hits an error. -V controls the severity level that is considered to be an error.