In order to get SOAP up and running you will need to add a web services user in the admin panel.
- System->Web Services->Roles->Add new role
- Give the role a name
- Set permissions for the role
- Then create the user with these permissions
- System->Web Services->Users->Add new user
- Add information about the user (the API key is the password used for SOAP)
- Under roles bind the user with the previously created role