I have bought something from the sandbox and successfully completed the checkout process using the PayPal Sandbox. When I use the GetSellerTransactions call, I find that the status of the transaction is:
Why doesn't the payment status change from "PayPalPaymentInProcess" to "NoPaymentFailure"?
The solution is to specify a valid Sandbox PayPal account in the <PayPalEmailAddress> field when listing the item.
At the time of listing a sandbox item, the <PayPalEmailAddress> specified by you could be invalid. When the buyer purchases such an item, that payment would be sent to this non-existent address. Since the specified email address is not attached to a real PayPal Sandbox account, you will see the <eBayPaymentStatus> as "PayPalPaymentInProcess" and this value will not change.
Please see this knowledge base article for steps to create PayPal Sandbox accounts: