paypal patch "connection lost..."

[imashination]

Ive posted this over at the b-planet forums but with the number of people that have read my message listed as 0, I dont think they're read anymore. So, Ill post this up here.

My problem is that Ive installed the paypal email confirmation patch so emails are only sent after a payment completes, but It wont get past my own checkout. I hit the Confirm order button, at which point it should take me over to the paypal site, but it doesnt it just sits there endlessly looping the small animation and displaying the connection lost message.

This is a windows 2008 server
IIS
VM 1.1.4
mysql
php 5.2+
paypal is a standard merchant account which ive previously used fine on another shop system.

Every other aspect of virtuemart works, including the original paypal payment module. Both of the notify php files give a blank screen which I believe is correct:

http://www.3dfluff.com/buy/administrator/components/com_virtuemart/notify.php

http://www.3dfluff.com/buy/administrator/components/com_virtuemart/notify_gen_transaction.php

If I go to the paypal sandbox and use their IPN tester, the old notify.php works fine, if I enter the notify_gen_transaction.php file from the patch then it returns with an error 500, internal server error.

That file has identical permissions. Ive even duplicated the working notify.php and pasted the contents of the new one into there and renamed it, but still the paypal IPN fails (im not even sure if it should work?...)

In my payment module I set up

Active: yes
name: Paypal Confirm
Code: PPC
class name: ps_paypal_conf
HTML based

Test mode: no
paypal email: (my full paypal email)
successful: confirmed
Pending: pending
Only verified?: no
Failed: Cancelled
Generate trans on confirmation: yes

I have the big wedge of php text in the extra info box

Any advice or guidance would be greatly appreciated. Im in the UK, if there are any other card processors I could use which wont have this problem of emails being send out at the pending stage then Im all ears, im not particularly attached to paypal.

If it makes any difference, would a paypal pro account/module make any difference?