I suppose that technically paypal has reversed the payment...but only because they could not get the money from the buyer.  They are hardly likely to tell you to post the item when they cannot get the money.

Buyer has now paid for their purchase through Paypal. Appears buyer was unaware of the confusion with the initial payment. Seems there was some problems paying with the phone!!!  So many unanswered questions here.

eBay manually refunded the FVF so looks like I will have to make another call to sort this out one more time. This has taken up far too much time already. Grrrr!!!!