I havnt had this specific issue with paypal but a year back i was sending my mum weekly payments to pay off a car i bought from her via F+F they basically accused me of money laundering through paypal, and expected all kinds of paperwork from me.
I found it best to be as calm and polite as possible as they are more likely to try and bend the rules for you, plus if you call up and get one advisor and they cant help, try again the next day as a different advisor MAY be able to or be willing to instead.
I ended up speaking to three different people over the span of four days to clear up my issue, but i got there in the end, the major problem with paypal is that a computer puts on the flag of your account and then you have to go though all this stuff to get them off, and usually a person has to help but not always will be willing