I sold a demo disc(bluray) on ebay couple days ago. When I created my auction, I created domestic only with free shipping. This buyer per ebay is US located (probably why he could buy it)when I try to create invoice, its asking me to ship it to UK. even base rate, shipping is almost as expensive as the item. I dont want to honor this because it is not fair. What would you do?

well, you will have to contact the buyer and work it out with them, tell them there was a mistake and that
you can't ship overseas.

but somehow you did or didn't click international shipping.

i sell international but one i didn't put the shipping in by accident and had all the buyers asking to bid but said they were somehow blocked.

If your listing was for "domestic only", then you can simply tell him that the listing was for US shipping and that you can ship to a US address but not the UK. The buyer should have read the details of the auction. To be nice I would probably offer him a refund as an option as well.