I'm very nearly there with setting up PayPal Standard. I'm using WordPress 4.8.2 and CiviCRM 4.7.22 at present.
I have set up a PayPal sandbox account and everything seems to be working nicely with the exception that it is showing up as (test) in CiviCRM - it took me a while to work this out and find it in the contribution search. I am definitely using the live link (if I use the test link, it goes to a different PayPal sandbox account that I have set up for that and that works as expected to produce a test contribution record.
I have tried it with a membership contribution and an event contribution. If I switch to the dummy payment processor (no other changes) it gets treated as a live contribution, so I think it must be something to do with PayPal but can't see how.
Is there some other setting I might have missed? Any suggestions very welcome.