The paypal sandbox configurations probably has been changed since Brannon Carter's post. As of now, step 1 and 2 are enough. You do not have to set up the IPN on your paypal sandbox. As a matter of fact, there are no IPN setting options anymore. There is an IPN simulator option but perhaps that is for something else as the name suggests. You do have to use your paypal developer business email address when setting up Paypal in Moodle (I am using Moodle 2.9)
Enrolment
Moodle 2.0 & PayPal Sandbox
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