First confirm that you can login to SalesForce manually using the same username, password, and security token. If they are correct, and you can login manually, then check what URL you have been given to login.
Live organizations login at https://login.salesforce.com
Test organizations login at https://test.salesforce.com
If you are using a test organization, you need to change the default URL that SmartConnect puts into the service URL when you activate the SalesForce Connector. By default, it configured the connection to the live organization. So if you login to a test organization, change the URL at the top of the SmartConnect window to look like this: