My Paypal ipn file works fine - once verified I can add the payer to my sql database and write to a log file on my server, but setcookie doesn't seem to work. I want to simply set a flag so I know this person has paid. How else can I set a flag so my Javascript code knows they have paid?
The IPN request is made by a PayPal server, not by the user's web browser. You can't set cookies in a user agent that didn't make a request!
To use PayPal for a membership system, you need to do a couple of things:
Have a user login system that uses a database. Hopefully you have this already! Include a column for having paid in the database table which contains users.
Include some data in the payment which identifies the user that's paying. For instance, include the user's ID in the invoice field.
When you receive a verified IPN, read the user's ID out of the invoice field and update the appropriate row in the database.