If I were to debug a procedure and set a breakpoint on a DBMS_OUTPUT.PUT_LINE and continually step over procedure but decide to terminate the debug process using the halt button, the DBMS Output window does not show any output for the breakpoint that was stepped over.
The reason that the debugger does not return anything to the DBMS Output window after it has been halted is due to a bug in Oracle 11g. In Oracle 11g, if debugger tries to return output through the DBMS Output feature, after the debugging session has been halted, then it will hang. This caused a lot of problems with Toad, when a user came across this Oracle bug. So, in order to prevent this problem in Toad, development decided that Toad will not attempt to return any output to the DBMS Output feature if a debug session is halted. Since they could not single out just 11g databases, this limitation is for all database versions.
Install v9.7 alongside v10 and run these debug sessions in v9.7 if needed. That is, if you are not running the debug session on an 11g database.
Waiting for fix to be released in a future version of Toad for Oracle.