I encountered the same error and was able to fix it after spending days on it. To show the destination mobile, you need to be connected to an open network and not be connected to any VPN client.
I could now see my iPhone connected and when I tried to run the app, I was getting an error message
"Previous preparation error: The developer disk image could not be mounted on this device.. You don’t have permission to save the file “857A0094-E1076-3219-8287-B381FFECF183B” in the folder “CoreDevice_DDI_Staging_501”.
An error occurred while accessing/creating the folder CoreDevice_DDI_Staging_501, preventing the app from running
Follow these steps to resolve this error
Open folder /private/var/tmp
Create folder named CoreDevice_DDI_Staging_501 manually by using finder options
Launch Xcode (version 15+) clean build and run the project.
As a result of following the above steps, I was able to fix the error and run/debug the application with Xcode and iOS 17.0.