Paypal Dispute With Worldstream For Server Not As Described

Ok here is the scenario.

Day 1 - Ordered server, agreed price and spec and installation date. Quoted 3 days setup time.

Day 3 - I was told need an extra day to setup this I said is fine.

Day 4 - server is setup but is missing 2 drives and only has half the ram I ordered. I email them to tell them this.

Day 6 - They finally respond to my email and tell me they have fixed the missing drives and ram they also offer me 10 days free as compensation. The problem is now the server is completely down, doesnt even respond to ping.

Day 7 - I email them to tell them server down and I now want a refund, I offer to accept a partial refund to compensate them for manual work involved in setting up server. (412 euros paid 350 euros refund), this offer made in goodwill so resolve quickly. 2nd proposal sent later for only 300 euro refund.

Day 9 (today) - No reply whatsoever and server still offline I raise a paypal dispute and within 1 hour I get a email telling me they agree to my 2nd proposal (only 300 euro refund) however they want me to cancel paypal dispute first.

I have read the paypal dispute policy and I see if I were to cancel the dispute and they then not refund me I have nothing since I cannot reopen the dispute, whilst if he were to refund me and I was to try and scam him he would have a strong case as paypal have the refund logged so he has far less to worry about. So I am not cancelling the dispute and even offered to set it to 300 euros but he says if I dont cancel the dispute I get no refund.

Just want to know peoples thoughts on this, consider I never have had the server I ordered working, its currently completely down and he was ignoring me until I raised the dispute which doesnt put his trustworthyness very high.

The provider is worldstream.nl