You are correct. It is not ready to run on WP 2.9.x and BP 1.2.x. As this issue has been discussed in a number of other threads, your best option is to contact the authors directly. You will not get any support here.
I think also that Facebook turned off FB-Connect a few months ago?
Use the plugin that says autoconnect. It works great and is coded with BP in mind. https://wordpress.org/extend/plugins/wp-fb-autoconnect/
FB will be turning off FB-Connect !
Instead for me it’s the only one that works very very well (and I have tried wp-fb-autocnnect, Gygia, simple fb connect, Facebook Connect to Adam Hupp, Faux Facebook Connect -only for comment- and others)!
The only ones that work (for me) are Gygia (but only if you have a normal WordPress installation) and BP-Facebook connect (there is a very little problem with logout redirect). And more, Bp-Facebook gets also the (facebook) email of user.
I don’t love its method to work, but it works.
I have Buddypress 1.2.3 and WordPress 3.0 beta 1 (network installation with subdirectory).
The very great problem that I have with Bp-Facebook (at the moment) is the incompatibility with WordPress MU Domain Mapping: if my secondary blog mantains subdirectory url, BP-facebook works (too well).
But if I change a subdirectory url with a primary url (example.com/secondaryblog to secondaryblog.com) it goes crazy.
And this is a problem!
I hope Peatling update his plugin!
WP-FB-Autoconnect has been updated BTW
I don’t know why, but WP-FB-Autoconnect (also this update version) doesn’t work for me: and there is only one other person that seem to have my same problem.
It’s a tragedy 
(((
@kagliostro i’m having the same problem as you, I could get WP-FB-Autoconnect working before but with WordPress 3.0 and Later versions of BuddyPress i’m having no luck whatsoever. What is Gygia?
