I don't' know what exactly you are seeing on the Paypal page, but the correct behavior after clicking "Proceed to checkout" is to be taken to a Paypal login page, it sounds like it is working correctly
Since you are on your own computer where you sign into Paypal it would show your Paypal account/login like this:
In the upper right it shows the amount of the transaction and if you sign in with a different Paypal account (can't sign in with the same account you registered) it will continue with the transaction, alternatively to test you can click the "Check out as guest" next to "Don't have an account" where you would enter payment information.
If something else is happening your can share your form and I'll take a look.
You are correct. That is exactly what I see. But don't I have the option to pay with a credit card(MC, Visa, etc.) without having to sign in to Pay Pal? The very first test I did I hasd that behavior...where I did not have to sign to Paypal...I used my mc to complete the test. I added you as a contributor if you wanted to take a look.
The process on the Paypal side has changed, you can still checkout with a credit card, it is just not as obvious, you have to click "Check out as guest" and then you get:
We're looking into whether Paypal can still present the credit card option up front as it was in the past, but for now that is the expected/correct behaviour.