I've used PayPal as recently as yesterday with no difficulties, Ubbie.
If the error message specifically mentions the seller's account, it is possible the seller has a problem rather than PayPal.
It COULD be a case of clearing your cookies and cache... but if that does not work, I would tend to the conclusion the seller's account may be restricted.
What sort of seller is it? Could it possibly be a scam seller whose account is under investigation?
Unless it's a seller whom you trust, or it's a small amount you're willing to risk losing, be wary of bank deposit... I have absolutely no problem using bank deposit for sellers that I consider trustworthy but my favourite payment method is definitely by card (so that I can rely on my card provider in case of a problem). PayPal should be fine in many cases... and if a seller's PayPal account HAS been restricted, I would regard it as worrying.