Hi Claire,
There are different areas that might be causing a problem so let me ask a few questions:
For the error message:
1. In Module Configuration, General Settings, please be sure that test mode is not enabled here. Do you still get the error?
For the emails not going out:
1. Can yo tell me the exact module version you have from Host >Module Definitions / Extensions?
2. What is your DNN version?
3. Please check this blog post on PayPal and Completion Events. Do any of the tips here clear the issue?
http://www.datasprings.com/news/blog/postid/7 Let us know what happens. Thanks!
Candace