
Goto your Dashboard > eCommerce > Payment tab and look for the Edit button next to Paypal Website Payments Standard.
Click it.

Here's what everything means:
Hit Update Payment Method and you're done.
That's it. Two steps and this will work safely and securely. Now go sell something!
In order for paypal to work correctly and for the eCommerce addon to complete orders that are paid with paypal the behind the scenes process works as follows:
The sympton:
If the IPN process fails you'll get an email and money from the customer, but the orders won't show up in your Dashboard.
The possible problems