The theme is available to download you can get it here, it includes documentation about setting the permalinks
The first problem I had with it, is it requires a staic frontpage and uses is_front_page() in header.php to do special stuff on the front page,but when using your plugin there are multiple front pages (one for each language) and is_front_page was returning false on these pages - to get around this I ended up pulling all the code out of the themes front-page.php and putting it in a template called _front.php, then changing the is_front_page() calls to is_page_template('_front.php'), ideally is_front_page() would have returned true for all language versions of the front page.
And the second problem was with your language drop down, when I used it the pages didn't work at all when referenced with /language/da, and the dirty hack I had to do for that was change the all my front pages to be called "en-home.php" , "da-home.php" etc, and then "modify" your Polylang_Widget href to use my naming scheme instead which is really ugly
// $url = home_url('?lang=');
$url = home_url('');
if (this.value == '$default')
location.href = '$home_url'; else
location.href = '$home_url' + '/' + this.value +'-home/';