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I'm not sure why you are having problems with <form> tags in blocks as I have implemented this on numerous occasions with great success. At any rate. Here are two approaches to adding PayPal links to a block.
The first is by far the simplest... A form button. Just provide a tutorial for your clients on how to change the values in bold red.
Example:
<form action="https://www.paypal.com/cgi-bin/webscr" method="post">
<input type="hidden" name="cmd" value="_xclick">
<input type="hidden" name="business" value="[b][color=CC0000]paypalemail@domain.com[/color][/b]">
<input type="hidden" name="item_name" value="[b][color=CC0000]Product Name[/color][/b]">
<input type="hidden" name="amount" value="[b][color=CC0000]$$.$$[/color][/b]">
<input type="hidden" name="no_note" value="1">
<input type="hidden" name="currency_code" value="USD">
<input type="image" src="https://www.paypal.com/en_US/i/btn/x-click-but23.gif" border="0" name="submit">
</form>
The next example is an altered e-mail link that uses a button image and masking. Same as above, just instruct them to replace the values in bold red.
Example:
<a href="https://www.paypal.com/xclick/business=[b][color=CC0000]paypalemail@domain.com[/color][/b]&item_name=[b][color=CC0000]productname[/color][/b]&amount=[b][color=CC0000]$$.$$[/color][/b]&no_note=1¤cy_code=USD" onmouseout="window.status='';return true" onmouseover="window.status='[b][color=CC0000]Buy this product![/color][/b]';return true"><img src="https://www.paypal.com/en_US/i/btn/x-click-but23.gif" /></a>
The above code is a direct copy and paste of code I am using in production environments with XOOPS (I've removed my details and added emphasis, of course.
). It will work with XOOPS blocks with no alteration.
I agree that the ability to generate the above code through the module would be much easier. However, if you write a clear concise tutorial for your clients, most should not have a problem working with the above code.
Hope this helps.