Open up your form in your web browser - it doesn't have to be in the popup window. In fact, it's easier to manage if you open it up in a tab in the main browser window. Put through a submission through your form. If all goes well, you should be redirected to the PayPal site where it will prompt you to log in as the buyer. Log in using your buyer test account. Note that you need to use the generated email address that's listed on the sandbox test accounts page, but you need to use the password that you yourself created. Confusing? Don't get me started.
Try putting some successful payments through, cancelling other payments and clicking on "Return to Merchant" on the PayPal site to verify all links work properly.
Finally, confirm that successful payments - and only successful payments are appearing in Form Tools. The actually nitty gritty details of configuration are done automatically by the files in the zipfile. But it's worth confirming everything works the way you expect.