Did you log out of the AppStore from Settings.app? Only when you log out, you will be prompted for logging in again.
Is In-App purchases enabled for your App ID? App ID with wild card (*) cannot be enabled for In-App Purchases. For your app, you should create a new App ID.
My two cents here: http://blog.mugunthkumar.com/coding/iphone-tutorial-%e2%80%93-in-app-purchases/