OK I fixed all the connection issues.
The summary of the exceptions I had and their solution.
The Exceptions:
1) " YouTube : quotaExceded : The Request cannot be completed because you have exceeded your quota "
2) " Inavalid client type 401 "
The Solutions:
> Regarding (1) -
* Check if limit parameter of "Queries per day" is set to "0" (YouTube Data API v3 -> Quotas -> Queries)
* If so, create a new project from scratch, set the Youtube API etc... now the "Queries per day" should be "10000".
> Regarding (2) -
When you set the "OAuth Client ID" make sure the Application Type is "TV and Limited Input devices"
How to create youtube api keys:
I suggest to follow the instructions here:
mod edit - link removed as the site referenced violates our piracy policy (wiki) in promotion of banned addons (wiki) - see the post 1027 below for the official how-to for getting API keys
Important Note! regarding insert the API keys in the addon:
Make sure after confirm the keys in the settings,
Go back again to the settings and verify they are actually set as the same and not an old one or something else.
Then Sign in, activate the device in Google etc.