Paypal processes ok, but subscription isn't granted

Problem. The user subscribes using LM Paypal. The user pays through thier paypal account. User gets message from Paypal that payment has gone through. In LM-Paypal Saved IPNS, I can see that the IPN from PAYPAL had been received for both Signup and Payment. However, the user is not granted a subscription. They do not show up in Lm Paypal subscriptions. I don't know if it helps but here is what I see in the Payment IPN (minus private info). The interesting thing I see is that the Processed field=0. It seems to me that during earlier testing, the one subscription that did go through had this field set to 1.

Transaction 12
field value
id 12
timestamp Mon, 05/11/2009
txn_id --- private ---
processed 0
verify_sign --- private ---
payment_date 11:59:55 May 11, 2009 PDT
payment_status Completed
payment_type instant
payer_email dwdusharme@qualitydigest.com
first_name dirk
last_name dusharme
payer_id --- private ---
payer_status verified
residence_country US
business ajohnson@qualitydigest.com
item_name 1-Day Full Access to Quality Digest
quantity 0
item_number 1
receiver_email ajohnson@qualitydigest.com
receiver_id --- private ---
custom 15032
mc_currency USD
payment_fee 0.33
payment_gross 0.99
mc_fee 0.33
mc_gross 0.99
txn_type subscr_payment
subscr_id --- private ---