Colleen; Yoy definitely only want to select a single security group: the CloudMan one. Selecting multiple groups like uses the most conservative settings in the union of the groups, so won't have the right ports open for CloudMan.
The ami I've been mainly using is ami-da58aab3 (although I've tried a few others).
I don't believe this will work with NX, which would explain being able to connect with ssh and not NX. NX requires a username/password. The latest CloudBioLinux images do this and support CloudMan: http://cloudbiolinux.org/ You need to enter a freenxpass: option to the user data with the password to use for access and it will setup the server on the back end. However, it would be worth tackling this second, after getting CloudMan working.
The user data may be where I am messing up: I have a few questions I'm not clear on, I think I've tried may options here.. 1. Is cluster name just something I make up?
Yes. It's used so you can restart the same cluster with saved data, and have multiple clusters with different names.
2. Are the <> characters part of the yaml structure? (I've tried both).
No. From the log you pasted it looks like you have those around your secret key. Could you try without it, and a single security group, on a clean cluster and see if that fixes the issue?
3. Do I need to specify the default information?
No. cluster_name, password, access_key and secret_key would be enough. It looks like you are nearly there. Hope this does it, Brad