Has anyone here ever set up Paypals IPN thing, where when a payment is received, the buyer is emailed a valid username/password, so that they can login to your site?

Any help you could give me would be much appreciated.

I do have paypal myself, and I was in the process of setting up an IPN like what you explained, but due to certain reasons, this project was temporarily halted. So, I haven't set up a complete IPN script like that, but if I was you, I would check out the forums at www.paypaldev.org. I know I got a LARGE amount of help from them regarding issues like this.

i hope this will give u a little help:
http://www.phpclasses.org/browse/package/2249.html