The negative balance is because I assume you transfered the money to your bank?If paypal say yes the seller is in the right and the refund is issued and my paypal is still in the negative what happens then.
Im sorry for all the questions this has never happened to me
They have now tried to put that money into holding, but as it is not in your account anymore your account is in the negative.
If they side with him, your account will stay negative until such time you fill it back upto positive. They can not take the money forcably from your bank or credit card, they can only take money in your paypal account.