You can't embed a form within a form, which is why you're having the trouble you're having.
One thing you can do to fix the issue is to make your form post to a final confirmation page which would then post to PayPal.
If you want to avoid the final confirmation page you could make your form post to a processor script like PHP that generates the request to PayPal and sends the user over there accordingly. The Express Checkout API is great for this sort of thing, but you would need to be familiar with web services in order to utilize that.