I hadn't tried to connect to twitch in a long time, and I had similar trouble as you, until I finally got the combo they want. There may be other setting which also work, but I used:
address = irc.chat.twitch.tv
port = 6667
TOP PASSWORD = oath:oathstringgoeshere
login method: SASL (/CAP)
bottom password = leave blank
As I understand it, the top password is for servers that require the password before even allowing you to connect, while the bottom password is for stuff like nickserv.
Once I connected, I did get a couple of errors, but I doubt these are fatal, other than I don't have the correct CAP commands set.
USERHOST Unknown command
LIST Unknown command
