What is the normal flow of Paypal API?

HI,

Like everyone else in here I am trying to sort out pp, but from a very novice perspective.

I have gotten a pp account and got the three api pieces of info which I input into the VM config.

At checkout it has the PP option. I click the PP option and I get these errors:

Error: Credit Card Number not found!
Error: PayPal returned: Security header is not valid

Do I need to wait until pp has put the initial deposits into my account for me to verify on their site before I can go to the next stage?

Since with this set up, pp doesnt show a credit card form on my site (which is the main reason for using pp?) then why is it asking for one?

Does anyone know what the credit card payment option does? That is, I have also listed that on my site, but dont know once you fill out the details what is supposed to happen - do you then manually somehow get a bank to charge a credit card (and so you need a merchant account?)