I have an Xperia Z C6606 rooted
Android version 4.3
I have tried both 4.3 and 7 Android SDK.
I kept getting the error message "device '' not found" as shown in the below screenshot.
I had the same problem.
The solution is to grant root access to ADB in Developer options. First of all you need to enable Developer options as explained on Android Studio then you enter Developer options as explained there as well.
If you run CyanogenMod/LineageOS you can easily allow root access for ADB as explained here.
Otherwise you have to do it via Terminal.