You've been snookered all right, but not by PayPal.

A buyer can "reverse" a transaction, there is a link for it right on the user's History page. All they have to do is click on the word "uncompleted" on the transaction history page.

I suspect they buyer "fibbed" to you, hoping they would trap you into registering and they would get a $5.00 bonus for signing you up, and possibly a $5.00 bonus for signing themself up as well.

The Yacht will have to wait.