I'm having issues with "pending" instead of "processing" too but my site is live and not using the Paypal Sandbox ... The funds are being received by the Paypal account successfully. So I'm presuming that WC isn't being notified by Paypal that the funds have been received... thus the "Pending" status....
It seems to be a common issue people are having ... I've been trying to sort it out for a while now and have been everywhere trying to fix this issue.
When I run http://www.mysite.com/?paypalListener=paypal_standard_IPN I get a failure... but in System Settings it says
wp_remote_post() was successful - PayPal IPN is working.
Also I'm a little confused about the notification URL ....
http://docs.woothemes.com/document/paypal-standard/#section-3 ...
This gateway should pass the correct notification URL to paypal, however in certain instances you may need to set it up in your paypal account.
So that's a notification TO PayPal ....
But on Paypal's "Edit Instant Payment Notification (IPN) settings" page it states
PayPal sends IPN messages to the URL that you specify below.
Which asks you to enter a url for notification FROM PayPal .... I have added http://www.mysite.com/?wc-api=WC_Gateway_Paypal ... but still getting all orders "Pending".
@bugaonz .... is this the page on PayPal you are referring to??
Any help to sort this out would be much appreciates