If it's holding it for a second or two before rejecting it, that's usually a sign that the validator is set to the wrong communication protocol for the machine.
With the power off, flip DIP switch 10 on the validator head to the opposite of its current position (ie. if it's currently set to off, turn it on, or vice-versa), then try again to see if it will accept your $1 bill and give you credit for it.