When you log in and are prompted for two-step verification, click the Enter a Passcode button. Press the button on your hardware token to generate a new passcode, type it into the space provided before the counter expires, and click Log In (or type the generated passcode in the "second password" field).
Using the "Device:" drop-down menu to select your token is not necessary before entering the passcode.
“Incorrect passcode. Please try again.” If you are seeing this message, your hardware token may be out of sync. Re-sync it by generating a new passcode three more times and entering each passcode. On the third entry, you should be logged in successfully.