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To work with Xamarin.Android, you will need to install Java JDK. If you have already done it and it still didn’t work, try installing the SDK again and configure your environment.
For more details on installation see the links:
http://studyxnet.com.br/guia-de-instalacao-xamarin-parte-1/
http://studyxnet.com.br/guia-de-instalacao-xamarin-parte-2/
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– Guilherme Nascimento
Did you install from the Xamarin installer? You have Java 7 x86 installed?
– rubStackOverflow
Check out this solution: http://forums.xamarin.com/discussion/30818/connection-to-the-layout-renderer-failed-after-updating-to-5-7
– rubStackOverflow