The problem, according to discussions on PayPal and eBay forums, is caused by an incorrectly formulated link to a tracking cookie. The problem also crashes Incredimail and perhaps some other email clients.
PayPal has been ridiculously slow to fix this problem. Why it can't just quickly fix one link in a template I don't know.
In the meantime, here are 2 solutions.
1. Change your settings to open emails without loading the images. If you're just seeing plain text, that should temporarily solve the problem.
2. Modify your hosts file. eBay user bachi_shop came up with this solution, which works for most people who have tried it...
If you don't care about contributing to Paypal statistics, as I'm sure most won't, the easiest, most permanent fix is to:
1. Start Notepad.exe as Administrator (right click notepad, and choose "Run as Administrator").
2. Open this file, or create it if it does not exist: C:\Windows\system32\drivers\etc\hosts
Assuming you installed Windows in the default location, if not substitute C:\Windows for wherever you installed it.
3. Add this line to the end of the file:
4. Save the file.
This will basically route 2o7.net request back to your computer, which will reject it, allowing you to read your emails quickly and in peace once again.
This fix will work on 32/64 bit versions of both Vista and Win 7.
You can also find instructions here on how to modify your hosts file to fix this problem:
http://www.howto-outlook.com/news/paypa ... ehangs.htm