Under the configuration page for the plugin it shows this message:
The WordPress.com Stats Plugin is configured and working.
Visitors who are logged in are not counted. (This means you.)
Visit your Dashboard to see your blog stats. If you are asked to log in, use your WordPress.com username and password.
Under the WordPress.com Stats page under the Dashboard it shows this:
You are not a member of this blog.
If you have just installed the Automattic Stats plugin, this error probably appeared because the API key entered in the plugin belongs to a different WordPress.com user account.
Have the owner of the API key visit this page and add you to the blog, or Get your API key here, then deactivate and activating the plugin and enter your key to add your account to the access list for this blog.
It accepted my API key, and it says that it's functioning, but then the actual reporting page appears to think the installation is invalid. I have followed the directions to reinstall this plugin and it is still failing in exactly the same fashion.
What's up with this? I have the same plugin working on my wife's blog without issue. (I haven't check today, but it was working yesterday.)