Just cracked how to use the latest RIM MDS Simulator on my Vista box. Install the simulator as usual, and go to the install directory (in my case it's C:\Program Files\Research In Motion\BlackBerry Email and MDS Services Simulators 4.1.2\MDS). Make sure your user has write access to this directory, otherwise MDS will fail to run. On Vista installs, this directory is read-only for your user (should be OK with XP, though). Now, for the final bit: open the run.bat file and replace the following:
Now the MDS Simulator works and I can browse the internet from the BlackBerry simulator. When you are done, just press Ctrl-C on the MDS console and then exit it (so eighties, isn't it?).