That code I posted was an example. It won't work as-is. Not everything can be copy-pasta.
Obviously you'd need to modify it with your own URLs. And to remove the spaces I added to prevent the linking.
Any time you want to do things outside the normal route, some coding is going to be required. If you want customized stuff, then you are going to have to do it custom. This is part of the reason I removed the connect widget. It was never intended to actually be used in the first place. It was demonstration code. I wrote it to show people how to make their own SFC-based plugins. Frankly, I was shocked when people actually tried to use it, because it so obviously *didn't work properly*. It was never intended to work properly. That totally wasn't the point of it at all.
And that's why it's gone. It wasn't meant to be a full solution. It wasn't meant to work full time, and if you were using it at all, then you were using it incorrectly, because there was no correct way to use it.
A full login-from-the-sidebar solution is by its very nature going to be very custom. Different people want different behaviors and different mannerisms. People complained that the login button stuck around even though you were logged in, for example, but others clearly used it anyway and didn't care. Some people wanted logins to go to the admin screens, others wanted it to come back to the front page of the blog. Things like that are what make this highly-custom, and making a widget that suits everybody and is still "simple" is freakin' impossible.
The normal login and register screens give a solid foundation to work with. They're not custom, they're pretty much the same everywhere. If you don't like the look of them, then you can use other plugins like Mark's excellent Login Logo to customize them.