Sometimes, the problem is that the file exists but does not match the www or non-www of the website.

If your site is "pushed" to secure-non-www (https://yoursite.com), then the ipn handler file should match.

It does not appear to be pushed, but that's one thing to check. Right now, it appears your site will accept either www or non-www. (Another topic)

If you are using Express you shouldn't need to check the settings in PayPal.