Using the PayPal sandbox is very difficult, I have no magic solution. Its not really possible to setup a public demo using PayPal sand box because it requires the developer to be logged into the sandbox to work. I only test with the sandbox on localhost then on a public facing site I use production PayPal.
PDTId is not the same as merchant, in fact for PayPal Standard there is no setting for merchant id there is APIUsername, APIPassword, APISignature, Email, and PDTId, they are all different values.
Hope it helps,