Small update, I have fixed the issue........simply by putting my website online....
After going through the code of the extensions and checking if the server could even connect to PayPal to send the validation message (which it could), I noticed the IPN History log at my paypal account. When I had a look at the messages I noticed that all the messages had a 503 error.
It took me a while, but I figured out where the 503 notification originated from. The issue had to do with the online/offline status of my website. If a website is offline (meaning you have to log in as admin to have a look at your website) and you're not logged in (PayPal isn't logged in as well) Joomla is generating a standard message displaying a message like:
This site is down for maintenance. Please check back again soon.
This message is send with a 503 notification.
Apparently Nice PayPal Downloads still processes the IPN message from PayPal, but as Joomla is responding with a 503, the response is not registered at PayPal as valid.
Putting my website online did the trick. It is, however, an interesting issue to look at for future versions of Nice PayPal Downloads. It has cost me quite some time to figure this out.
Apparently more people are facing this issue with integrating paypal in Joomla (not particular Nice PayPal Download users): http://stackoverflow.com/questions/7059 ... 16#7659616