This is how I got it to work for me.. I used these instructions:
Thanks to Dolphin Installers for this:
Using Facebook connect is quite simple.
Apply for Facebook account.
Then visit this link http://www.facebook.com/developers/.
Click setup application.
Once you login you should see your API key and secret key on the basic
page. Edit your description, logo and icon and leave everything else as
is.
Visit the connect tab. Your connect url is the sites main url (example:
http://www.mysite.com). Also add your base url. Its the same as your
main but without http://www. I selected request friend linking and
added a description.
Leaving everything else the same, save and retry.
That seems to have gotten it working for me. Hope this helps.