Having  a similar problem with MPPE. Applying the network-manager -
0.7~~svn20081018t105859-0ubuntu2 proposed patch from Bug #290468 appears
to have fixed the dialogue box, but the VPN still fails.  I can connect
through the console using the PPTP plugin directly using the
instructions from this page:

http://pptpclient.sourceforge.net/howto-debian.phtml

For whatever reason Network manager still has issues with the PPTP
plugin and/or with MPPE security settings.  I attempted a fix from PPA
but it made no difference.

-- 
MPPE settings not persistant / not saved, resulting in failed PPTP VPN 
connection
https://bugs.launchpad.net/bugs/282624
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