Thanks for getting this debug code back. I can see the two error messages but the first one that is talking about the items looks to be only a warning. Since the message on the first one says the transaction has been completed this tells me that it is not the issue that is preventing the transaction from occurring.
The second error you are getting seems to be the key here. An invalid merchant configuration can mean a number of things but it basically means that there is something about the configuration of your merchant profile with PayPal that is not rite. It could be that you have not enabled the DirectPay services, or you might need to agree to a terms of service agreement. One place you can start would be to check your profile and check on the services that you allow on this profile, it might be that you just do not have Direct Pay enabled. You should also try to test this out with the Express Checkout to see if you get a similar error.
If you cannot login to your profile in PayPal and easily figure out what the configuration problem is you should contact PayPal and ask them about it, they should be able to go over the possible reasons for this error and help you check on these settings.
I noticed that you have a couple other new posts about this same issue, I will also update these with a link back to this one to avoid any confusion about which one to reply to.