I ran into this as well. I noticed that it was trying to use the Jenkins service account (Local System) regardless of what credentials I gave it. So i changed the service account to a domain account with TFS permissions and it worked. For some reason it seems to completely ignore the credentials you pass to it in the configuration.

I can now successfully test the connection with "- none -" being selected for the credentials

Thank you for your answer. I tried what you say and it doesn´t work for me neither.
I try access to Jenkins server with TFS permissions account and I get the same error.
With "- none -" access is the same result.

I try to connect to TFS 2015 (instead of 2012) and I get the same error but with more information:
"TF400813: El usuario MyDomain\HostName no tiene autorización para obtener acceso a este recurso. - Microsoft Team Foundation Server"
I'm not sure if Plugin tries to connect with this user instead of using Jenkins service account.

foobartn and pemola: I have posted pull request #135, which has Cloudbees build #682 associated with it. It should take care of the [Test connection] button and your assistance in verifying the fix would be appreciated. You can do so by downloading the pre-release .hpi file from the Cloudbees build page and uploading it to a Jenkins server.

Thanks!
- Oli

I just tried hpi from build #682 and test connection button worked as expected - i.e. configured credentials were used during ntlm auth process.

The fix for the [Test connection] button was included in release 5.2.0

Thank you very much! Now it works.