The same error comes up if you go directly to Paypal without providing any additional information:
Some required information is missing or incorrect. Please correct the fields below and try again.
Error: Invalid Merchant or Merchant doesn't exist!
I added one of the paypal buttons generated from the clients PayPal account and that processes fine (granted it is using a different method):
Is there a way to echo the stream sent to PayPal from the checkout page to confirm and at least review what is being sent to PayPal? It could very well be sending nothing which would return the same error.