What country have you set your home country to in the cart settings?
I was googling this error message and found this post that says its an issue with the login credentials:
https://www.x.com/docs/DOC-1884
"Invalid Vendor Account" means you've not given valid user/vendor/partner/password information. And, if you've not received those items from PayPal and/or your account isn't activated yet, of course you're going to get that error.
"Invalid Vendor Account" message can also mean that you are attempting to use "test" credentials against the "live" server
If I am not mistaken paypal manager is the virtual terminal correct. Payflow not coming with paypal manager doesnt sound right how would run reports to see transactions at the gateway or issue voids/refunds?
-Scott