There are two possible things happening:

1) Are you sure you have PayPal's Website Payments Pro service? You need it to use iSwipe: http://appninjas.com/paypal
iSwipe will not work with Website Payments Standard or PayPal Business.

2) You entered the login/pass incorrectly when using WebFill. Sometimes customers need to try two or three times to get it right - please try it out a few times and if it still isn't working, there may be a problem with your account. You should email vt@paypal.com for assistance.