We’ve seen people having trouble with this before:
But that was a somewhat different device. There are a bunch of suggestions there about passing serial port parameters to the jvm on startup. I’m not sure why they are needed. I certainly don’t need them on Ubuntu 14.04 on intel.
It is most dubious that you see the device just fine at the OS level, but then the nrjavaserial (rxtx based) library that openhab uses for java serial port access cannot pick it up. But that was exactly the case as well for the post referenced above.
I have one suggestion: there is an “Insteon Terminal” program on github that uses the rxtx library (not nrjavaserial, which is a fork of rxtx). If you manage to get that one working it points to problems with the nrjavaserial code.
And another suggestion, this one easier: try the very latest OH 1.8 binding from the nightly cloudbees build. It should work with OH 1.7, just drop it into the addons folder. I don’t expect wonders from it, but at some point the InsteonPLM would not coexist with other bindings that used (a different!) serial port. Long story, but give it a try.