The dropdown by default is greyed out and becomes selectable upon successful connection to Analytics. Basically, once you enter the details for Web Service User Name and Shared Secret, hit save and then clicking the "Refresh Report Suites" should populate the dropdown. The web request when you hit the "Refresh Report Suites" button should look like  in your browser and it's response brings back a list of Report Suites. See if this request is throwing any errors.
I believe the issue is likely with the Analytics User permissions.
Can you please check the permissions assigned to the Analytics User you're enlisting in this configuration?
The first thing to check is if the Analytics connection details are accurate. The common mistake is while entering the Web Service User Name. It's typically in the form <username>:<TenantID>, Can you confirm this?
Moreover, when you click the button for "Refresh Report Suites", it's supposed to fire a REST call. Can you see what the response to the request is ? It should contain query parameters such as username=&sharedSecret=.
Yes, the username format is correct. Although when I click refresh report suites, no analytics report suites gets populated and the dropdown "Analytics Default Report Suite" is read only for me. Any thoughts?