Did this fix work for you? I have the same problem! Some people are able to register without a problem. What I have noticed is that the person trys to make the purchase, but cannot. They see it still in therir shopping cart and try again. They get charged each time. I see them registered as a customer, but I do not see their order in my Zencart admin panel, but I see it in Paypal, a few difrent times, complete. I get your same error code sent to me.
ALERT: PayPal Direct Payment Error ( <!-- -->) What is this? My customers get pissed! I hope you have a fix. I spoke to my last customer. He sad that he tried to pay with American Express first, then used another card, all cards charged, but he is stilll not a registered customer! STRANGE HEEEELLLPP!!!

I spoke to Paypal, they said that there is no problem on their end and that it is not their error code. I also noticed that the guy tried to change uo his address three times, just in case, but it was not an address problem