Very sorry for the trouble! Unfortunately, PayPal is a bit restrictive when you make a payment through Splitwise, so it's possible they may be blocking a payment that would work perfectly fine on their own website. For example, PayPal doesn't let Splitwise make payments to PayPal business accounts, or payments in certain foreign currencies, even though they do offer those options directly. They may also block payments to certain email addresses for internal reasons.
If you have repeated trouble sending a PayPal payment through Splitwise, you may want to try making the same payment directly from PayPal's website. Afterward, you can record the transaction as a cash payment on Splitwise. We realize that's pretty inconvenient, though, so apologies for the trouble!