as soon as your file a dispute ,the payment will be withheld by Paypal,seller can still see the payment in his account but it would say on hold ,so once the case is resolved in your favor,it will be returned to you.
now if he has already spent or withdrawn the fund,then he will have a negative balance and paypal will ask him to add fund to turn it neutral.
when you win the case,I have seen two scenarios,either Paypal gives you back the payment in whole or partial and says it will go after the seller for the rest of the money.
if a seller keeps selling and money keeps coming into his account,then that money wil go to you,if he does nothing ,paypal will make up the difference and pay you,and then go after him,
most active sellers who sell on Ebay,Paypal is their only method to accept payment so they will always have money coming into their paypal account.
