I think it is simple WS-Security configuration. I don't see anything here that suggests STS is involved. By the way, what you are talking about is Pega connector talking to an external service right? If my understanding is correct, you need to enable WS-Security on the connector and configure a WS-Security profile instance with UsernameToken on the Outflow.
i have asked for the Keystore and Truststore from the service Provider as i have to create a WS-Security profile. is there anything else you think i need to ask them? I have also asked for the username and password to be included in the outflow (if they have any).
You should check with the service provider how their ws-security is configured. From the error, it is evident the service is expecting usernametoken in its inflow (connector's outflow). So once you have the username and password, at least you should get past this error.