I had a similar dispute i sold an ecu that worked fine, the guy put in a dispute with paypal saying it wasnt as described which it was. Paypal gave him his money back (buyers protection guarantee) of 250 which then left me owing 250 to them.
They then told him to send the item back to me but he sent me back a box of rocks. after months of phone calls trips to the police station etc ebay finally realised he was freudster and had done something very similar in the past.
Had this not have been the case though i think i would have had to have paid the 250 and kept a box of rocks!
Good luck with it mate but its not likely too get resolved