Entity API fieldable entity path issue
GOT IT! After googling for a while I came accross this: http://drupal.org/node/224170

This clarifies that

"When a % symbol is used in a menu element (see example), the text that follows will be used to build the name of wildcard loader function.

In the example above, "%node" tells drupal to pass the value of the second element to the function node_load(). _load is always added by Drupal to construct the wildcard loader."

So as long as the notification_type_load() function wasn't implemented it lead to a bug :)