Stephen, thanks for writing back. To answer your question, I've always use the default, which is to have the funds come right out of the test account's paypal balance. What else might I be overlooking? I've been working on trying to get this up and running for weeks. The forums on Paypal's x.com are horrible.
Would it help if I gave you access to my test page that has my sandbox version of the subscribe button? You can even use my sandbox test buyer account too.