At first the failure seemed to be due to connecting Arduino via Saitek Yoke's USB hub. Once I plugged Arduino back to the same front USB port it showed as "Working properly" in Windows' Device Manager.
I unzipped SimVim again, and able to start SimVim but it would not see my Arduino. I went to Firmware Upload procedure which did find the Arduino on COM4 (yay!) and did seem to upload Firmware (red leds blinking etc...) but hang at the very end :-(
Restart of X-Plane/SimVim with Arduino plugged-in leads to single red Rx LED blink and X-Plane hanging.
Restart of X-Plane/SimVim with Arduino unplugged leads to X-Plane hanging.
Edit: Blink from Arduino IDE/AvrISP mk II works fine (Mega 2560 on COM4)
Update: The problem was solved by physically removing USB Bluetooth Dongle (which makes disappear "Standard Serial over Bluetooth link" Ports from Device Manager). SimVim+Arduino would still work if the Bluetooth dongle is re-plugged but would crash at any "Hardware Reconnect".