From Dan Froomkin's report at WashingtonPost.com:
What the President said:
The president said that Kerry 'spoke with sympathy for a communist dictator in Nicaragua in the 1980s and criticized the democracy movement as terrorism.'
What Kerry had said originally:
The Kerry quotation about the Sandinistas on which the Bush campaign based this statement said: 'Our foreign policy should represent the democratic values that have made our country great, not subvert those values by funding terrorism to overthrow governments of other countries.'