Problem setting up Paypal payments

Hi,
I recently purchased the classified responsive theme. I am also trying to setup the paypal to work but no luck. – I have a Callback page created which is blank but is set with Template [Payment Callback]
– I go to ‘Theme Options->Order Manager’. There is a ‘Payment Gateways’ tab with basic options.
– Basic Settings: Gateway [Enable], Use Sandbox [No], Paypal Email [correct email], Currency code [USD], Display Name [Pay now with Paypal], Recurring Payments [Disable], Language [US].

my user registers on the site, chooses a membership package, pays thru paypal. Payment goes through and is accepted. Then nothing, No call back page called. No order is registered in ‘Theme Options->Order Manager’. I think i am missing some extra configuration to do with the callback.
Also i do not know how this sandbox works. i get error. That is why i tried live payments.