Request you to check authentication in PI Web API (Configuration).i.e. authentication set to Basic or Kerberos.
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Are you using the cloud hosted Grafana? If so, the problem is that your PI Web API endpoint is not resolvable from the Internet. In this configuration the HTTP Access is set as "Server (Default)", which means that the Grafana cloud instance is making the calls to the PI Web API and if it cannot resolve the URL it will fail.
If you're running locally, I'd check the same thing - can the host of Grafana correctly resolve the URL you have entered?
I have a cloud hosted Grafana instance connecting to my PI Server using this exact same configuration but my HTTP URL is exposed to the Internet.