Lucky...

You can only upgrade the firmware to 2.xx using the new mydlink app. If you ever use it, do NOT upgrade the firmware because there is no way back to 1.xx.
I believe you do have to have the username and password with this camera (new security standards).
Is there a way to enter that in the XProtect software? The connection URL should be similar as what is used in VLC.
Are you trying to connect remotely or locally? or both? If remote make sure you port forward HTTP and RTSP ports in your router to the camera.