then following the completion of the PayPal payment, they would be sent to the "Thank You" page back at the site, and at the same time a notification would be sent to a separate hidden page (IPN). 
you have the flow right up to this point. the timing of the post to the ipn page is an unknown, it wont happen at the same time as the user being directred to the thank you page, it will happen at a later time. when the user is dierected back to the thank you page, the payment is entered into a queue for pay[al to process with the merchant bank, it may take a few seconds for the transaction to process, it may take minutes, or hours even.
That IPN page would then have some kind of Update behavior on it that would mark the item's table column for Status as "Sold"? Is that a correct summary?
Yes, that is correct
If this is correct, do I simply use the sample IPN code that PayPal has for PHP on their site as a starting point and then add the recordset and Update behavior?
you are correct again
I know that within the PayPal account their is a location for me to enter the URL for the IPN page once I create it, but do I also need to include any information back at the checkout form for this part?
no nothing special needs be done to the code on the site for IPN except for setting up the IPN receiving page.
