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Hi folks, just a tip in case you are getting this error (as shown in the title). There are several causes for this error but one I don't think I've seen but solved is file permissons.
Today, a fellow attendee at #drupalsprint London wanted to try out Panopoly but got stuck at the FTP stage of the install with the error message
"Cannot connect to FTP Server, check settings"
We check his ftp settings - his local ftp server was running and he was able to connect to it via the ftp command at the command line but we still had this error within the Panopoly install.
The solution was his file permissions, I provided a crude blanket solution to remedy (he might want to refine it later for security when he uploads the site onto a production server)
chmod -R g+w,u+w,o+w *
chmod -R g+r,u+r,o+r *
This makes all of his Drupal files readable and writeable by any user. This got him going, but as I say, he would want to refine the settings, i.e. restrict access to certain files for security reasons once his site is on a production site.
I would note that the "Cannot connect to FTP Server, check settings" gave us no clue about the root cause, so maybe it would be helpful to enhance this part of the Panopoly install, cheers!