To connect with FTP and be able to transfer files you have to put the follow credentials:
- host - that is the hostname, or IP of the source site,
- username- the FTP user
- password - the user's password
If the credentials that you enter do not match the login information in the system for your site, the FTP connection will fail.
Also, double-check that you are not entering http:// in front of the domain name in the field when entering the host address.
The FTP account should 'point' on the source 1.5 source folder. Sometimes people use FTP account that point to a different folder. If that folder is a parent of the Joomla folder, then you can use the root path to instruct component to point to the correct folder.
Also we use the core Joomla! FTP libraries that indeed they have problem some times for secure FTP. We cannot do anything about that since it is a bug within core Joomla! libraries.
In any case the ftp is only used to transfer media files and is not necessary for the database items transfer. Therefore you may continue with the migration and manually copy the images folder from 1.5 to replace the one in the new site.