Sorry for jumping on an older post but I am having the same issue.
After reading this post I also found the localhost reference in the confirm.php page and changed it. But this unfortunately did not do it for you. The paypal window opening still shows the checkout_failure.php page.
If I apply the checkout wizard again and test it on my local machine = it works. But as soon as it is uploaded to the live server the checkout_failure.php page appears.
Any new ideas on this one?
Thanks a lot,