Problem using fundraising plugin with paypal sandbox

Hi,
I've been trying to set up the fundraising plugin to work with paypal sandbox and in the settings page of the plugin I've got this message:
In order for PayPal simple payments to log properly you must turn on PayPal Instant Payment Notifications and point it to

I have turned the IPN on for my fake business user and pointed it to the URL given to me by the plugin's message.

When I try go make a donation I get this error:
There was a problem connecting with the paypal gateway. (CODE)560022 The X-PAYPAL-APPLICATION-ID header contains an invalid value

What else can I do to make it work?

Thank you.