It shouldn't need any username or password as it just uses the credentials and sip proxy from ext1 tab.
I've attached a screenshot of my setup - working fine with 8 spa500ds attendant consoles on SPA504g phones and asterisk 1.8.
Maybe you need to add ';nme=joe bloggs' at the end of the speed dial - not sure if it is compulsory.
Also you might need to add hints to your asterisk dialplan to get the blf (lights) working. The blf component of your speed dial will attempt to subscribe to an asterisk hint.
Checking you are on the latest firmware for the phone couldn't hurt either.