PayPal and Registration trouble in Membership

So I finally got my sign up page organized.
-I have both free and paid subscriptions active
-I am using Paypal single payments with a Free and Premium subscription level
-IPN is enabled
-User reg. is set to "none"
-Both subscriptions are set to 'serial' '1 month renew'
-Gateway is 'active'

The user is created, however username and email are the only values passed back to admin area. User is also inactive and not assigned any subscription or gateway.

On reg. user is passed to Paypal, process completes. However, user can't login because they are inactive. Checking Paypal has no record of payment, IPN has no history and Membership has no record of transaction.

Please can anyone shed light on this!?!?