I got this problem and find the solution on internet a few days, I found this post http://mjcproxy.mjchiasson.com/forum.op ... c80971c8d9 and followed their instruction to modify the code in catalog/controller/payment/pp_standard.php , but still not work.
Although I amended the Notify URL to index.php?route=payment/pp_standard/callback , PayPal still callback to payment/pp_standard/callback after I turn on the SEO

Finally I think could I redirect the url to the correct one? So I try to add the following code in the .htaccess file
Redirect /payment/pp_standard/callback http://www.yourdomain.com/index.php?rou ... d/callback
I try to checkout in my store again, after I completed the payment, I received an email from my store and notice me there is a new order, and I go to the store admin, i see there is a new order on the home page dashboard

I hope this information could help you all and solve the problem also.