I am using the PayPal Pro addon and have not activated the PayPal addon, however, on my forms in the credit card area it shows an option for "PayPal". When you click this radio button, it does nothing and prompts you for your credit card information.
Also, possibly unrelated, but when you submit your form you get this error:
Header may not contain more than a single header, new line
detected in
/home/office/public_html/wp-content/plugins/gravityforms/form_display.php on
line 91