I had an old paypal account and recently made a new one. I know what you mean by step 3 ("Set up your payment solution"at paypal). It is their "New and Improved" paypal sign up procedure.

Ignore it, I went through all the frustration to get rid of it, and it there it is, haunting you as if you didn't do step 3. As I remember, the step 3 takes you to a page so full of time wasting things that you can do at paypal and worthless links, but no real solutions or a way to do anything useful.

After hours of trying and then calling paypal, a rep. finally admitted that it was there web designers who has not fixed it yet. (this was 2 months ago for me)

If you went into your profile and set up the paypal ipn properly, then you are fine.

My paypal works OK, and step 3 still is there every time I sign on with this new account. Those who have older paypal acc, like my other one, do not see Step 3.