OK, just had big-time call with Paypal.
Without going in to too many details - this has absolutely nothing to do with us.
This Rick guy at Paypal customer relations who sent the message to VB saying the recipients need to check what is blocking the account, got it wrong.
It was a VB/Paypal mass mailing problem. Nobody's fault really.
Anyway, my Paypal guy is shooting off messages to the US Paypal guys to get it sorted.
I'm off for a coffee.....