Hi Jeff
First things first, thanks for responding and helping me out with this.
I am running on a windows platform using php and mysql.
I downloaded the latest stable branch version (zip format) of Moodle this morning 6 Nov and used it. I still encountered the paypal problem so went to the folder you suggested and opened the php file in Dreamweaver MX. I deleted an extra line below the ?> tag for php and saved the file.
I opened the sql file and removed extra text and saved the file.
I uploaded all the moodle files again (including the changed paypal files) but still have the same problem. Any ideas what I should be looking for ?