Ken,
A defect has been logged for this In Live API Creator 3.1x, in the mean time here is the workaround to connect to Salesforce Sandbox instance and getting error after clicking on Test button.
INVALID_LOGIN: Invalid username, password, security token; or user locked out.
Workaround:
Log Into LiveAPI -> Create New API -> Empty API -> Proceed to API Properties -> Integrate (Data Sources) -> Add -> Pick Database type: Salesforce -> fill in all required fields.
Modify jdbcurl:
jdbc:salesforce:SecurityToken=<sec_token>;useSandbox=TRUE