I find it weird that you forgot to mention these past incidents before waldizal brought them up.
This whole situation is very painful to witness because there is very little doubt in my mind that Josh shipped the knife and laurin did not receive it.
I agree that Josh was terribly careless, even sloppy, with regards to the way he shipped this knife, especially considering the well-document distrust he has for PayPal.
On the other hand, even if he had kept all the records, that would have meant very little to PayPal, they are simply enforcing their "item not received" buyer protection feature.
As for tracking, I have to disagree with laurin, I do not think it would have reduced the chances of the package "disappearing". Tracking on internartional shipments varies enormously depending on the destination, but in most cases it seldom works all the way to the delivery. I sent a knife to Mark (Buffalohump) in South Africa a couple of months ago using Global Express and I had almost real-time tracking all the way to the USPS International Dispatch facility at Miami International Airport, and then nothing. When checking USPS track & mconfirm, that package is still in transit although it arrived around 8 weeks ago.
My personal opinion is the following: Josh clearly warned laurin that he would do his best in order for the knife to get to him safely, but that he could not take responsibility if it did not. Reading laurin's response, I would say he agreed to the terms.
Clearly, Josh did not do his best to ship this knife, but he cannot bear the responsibility alone. I think laurin jumped the gun by opening a claim with PP so quickly, and even more so escalating it to a dispute. PayPal gives the buyer and the seller a timeline to try and find a consensual settlement, laurin did not use that option.
Furthermore, laurin could have used the GB&U section of this forum to seek advice about how to handle the situation, he did not.
As it stands, laurin has already won his case against Josh simply because there is no way that the latter can prove the knife has been delivered.
I hope that laurin realizes that this outcome is unfair, especially considering his past negative experience. I am sure that had he mentioned the fact that other packages had gone missing recently, Josh would have handled this deal differently.
Unless that knife shows up by some kind of miracle, in which case laurin would have to pay Josh in full immediately, I believe both parties should bear 50% of the loss.