Sure appreciate the help Eric. I made the changes as per your comments and found I had to add a hidden input to the value for the invoice variable = to the shopping sessionID.
Just completed testing of the IPN in the Sandbox and it passed! "IPN successfully sent." So that looks promissing. At least it is recieving and replying fast with PayPal.
You mentioned to remove the redirects. How will it know weather to go to fail or success pages? Is that part of the xml? Or do I set that through my PayPal Profile: Auto Return & Payment Data Transfer?? I am just wondering, as I will have to make sure that these pages are using https url's right?
What should be my next steps? Confirm that the veriables are being set/recived correctly? I have set up test accounts for the sandbox, however an old post I read a recomendation to test in the real invironment so that I get the final paypal account confirguration adjustments correct. Then some how cancel/reverse the transactions.