I had this error about a month ago and I thought Vanilla Visa's were no longer good for Ebay, but a couple days ago, I had one laying around and I decided to try registering it again to "my" name and address at Vanilla Visa's website. And sure enough it worked on both Ebay and Paypal. How long has it been since you registered it?
I have also noticed that the registration process needs to be completed on gift cards before being used for eBay & Paypal. Sometimes it doesn't matter, but for pp & ebay it does.