1) Check all connections. Check that the ICE is powered and is plugged into the PC.
2) Make sure the ICE driver is installed correctly. Try uninstalling it and reinstalling it.
3) make sure you are using the correct POD for the part you have selected in PSoC Designer. A CY8C29000 POD will only emulate CY8C29x parts.
4) Check the PSoC Designer options. Go to Project/Settings/Debugger, select the ICE from the pull down menu. Under Pod power source select either "ICE may power pod" or "external only" based upon the power supply which is given to pod.