This error means that the API credentials you have entered are not valid. If you know that they are then you might be running a test transaction on the sandbox. You will get this error if you use live credentials in the sandbox or vis-versa.
If you would like to test in the sandbox you should go to the PayPal developer site to sign in and setup a test user to get some sandbox API credentials. If you only want to use the live credentials then you will need to disable the use of the sandbox in the three Express Checkout server behaviors on the checkout and pp_confirm page.