This makes no sense to me. (But I greatly appreciate your efforts...)

Let me back up and ask one question at a time.

XXX MY SETTINGS XXX
Order status:
1. Pending.
2. Download Available.
3. Download Complete.
4. Update.
---
Attribute settings:
Downloads Controller Update Status Value: 4
Downloads Controller Order Status Value >= lower value: 2
Downloads Controller Order Status Value <= upper value: 2 (default was 4)
---
Download window: 7 days/5 attempts
XXX XXX XXX

Q1: Is this not the process, given the above settings?:
Stage 1: Customer purchase. [Order status: 1-pending. Download inactive.]
Stage 2: Payment validation (instant via PayPal assuming no problem). [Order status: 2-download available. Download feature is active.]
Stage 3: All done (after 7 days or 5 attempts). [Order status: 3-download complete. Download inactive.]

Thanks!