Arduino UNO + Ethernet Shield. Debugging Problems with Timer in Atmel Studio 6.2 with Visual Micro

[Sergii C. (Firma: Home) (perec-jar)]

Hello, dear community,

I write a program for Arduino UNO + Ethernet Shield. In my setup I run a 
TCP Client  which connects to a TCP Server. Server responds with one 
byte of information after connection establishment.  I use the Timer1 to 
measure how long i took for the server to respond after connection 
establishement. I need to use timer for maximal precision (counting 
ticks)

I use Atmel Studio 6.2 + Visual Micro (Trial version) to debug my 
application. In my config I have chosen:
Project Type: Arduino Sketch with C++ Class Example
Processor: ATmega328P
Board: Arduino Ethernet (there is either Arduino Uno or Arduino Ethernet 
possible to choose in the IDE, tried both, when switching Reload Tool 
Chain was done)
Project Properties->(Micro Debug): Full
Tools->Visual Micro checked: Automatic Debugging
Breakpoint Manager: Jump to Breakpoints

 I have tried 2 types of debugging:

1) Doing a live debug, i.e. I build project and start debugging right 
away. In this case if I don't use timer, then Client-Server 
communication works the way it should. However, my program hangs when I 
am attempting to set the TIMSK Register to enable the counter.

2) Debugging with a Simulator by opening an .elf file in IDE, switching 
from "No Tool" to "Simulator".  I am able to set the TIMSK and jump to 
my Interrupt Service Routine, when the timer overflows. However 
networking doesn't work. I track that with help of Wireshark.

I would very appreciate any help!

Here are some questions that I could not answer:
1) Which exactly board do I need to choose: Arduino UNO or Arduino 
Ethernet. In my case they are both combined.
2) Is the Simulator for those boards are designed to perform networking

But the most important for me is to answer why debugging with timer 
doesn't work. Please see a a part of my code attached.