Try changing:

Payment::set_supported_methods(array(
'WorldpayPayment' => 'Credit card (Paypal)'
));

to

Payment::set_supported_methods(array(
'PayPalPayment' => 'Credit Card'
));

That should do the trick.

Thanks grilldan. That solved half my problem. It now recognises Paypal but when you hit 'place order and make payment' the following error appears:

Fatal error: Call to a member function validate() on a non-object in C:\wamp\www\isa\sapphire\forms\CompositeField.php on line 213

Also if i add the following code into the _config.php file:

// Check if the site is in 'live' mode, use the live credentials.
// otherwise, use test credentials instead to be careful.
if(Director::isLive()) {
	PayPalPayment::set_account_email('mymail@mydomain.com');
} else {
	PayPalPayment::set_test_mode('mymailtest@mydomaintest.com');
}

I get the following error:

Fatal error: Call to undefined method PayPalPayment::set_account_email() in C:\wamp\www\isa\mysite\_config.php on line 48

Hope you can help. Thanks again.

Instead of using mysite/_config.php try using ecommerce/_config.php.

Thanks grilldan. Tried that with no luck. Same error is appearing. Any other ideas?

Ok, so it looks like the Paypal instructions page is out-of-date. For anyone else having this same issue, the answer can be found here:

http://www.silverstripe.com/extending-hacking-silverstripe-forum/flat/42312?start=16