Register only when paid

http://www.gravityhelp.com/documentation/page/User_Registration_Add-On

PayPal Integration

The User Registration Add-On integrates with the Gravity Forms PayPal Add-On to provide the following options:

Register user only when a payment is received.
When this option is enabled, the user will not be registered until the PayPal payment has been received.

Could you point me to how I need to set this?
I have PP and UserReg add-ons enabled. It is a network install (subdomain).

The form asks for username, name, prefix. The new user and blog are created before PP payment is taken. I can't find the option to delay this.

Also I have tried to add my own validation:

add_filter('gform_validation', 'my_signup_check');
function my_signup_check($validation_result){
  $forceerror = true;
  if( $forceerror ){
    $invalid = true;
    foreach($validation_result['form']['fields'] as &$field){
      if($field['id'] == '9_3'){
        $field['failed_validation']  = true;
        $field['validation_message'] = '** THIS IS A FORCED ERROR **';
        break;
      }
    }
  }
  if( $invalid ) $validation_result['is_valid'] = false;
  return $validation_result;
}

I can see that it runs, but it doesn't actually stop the form from submitting.

It is tricky to write up any non-trivial issue description in these text boxes.