After a bunch of tests I've come to the conclusion that CURL isn't installed properly on your server. Who is your hosting provider? I think you need to talk to them and have them look into their curl installation.
I've put up a simple page to demonstrate:
That should be returning a 404 error with a google logo. Once it does, I think your paypal transaction will go through. Give your ISP support that page to demonstrate that CURL doesn't work on the server.