The problem is that the button code they generate for you uses an html form. This cannot work in ASP.NET, we can only have one form on the page in ASP.NET and there is already a form there.
The solution is to just use a link with an image rather than a form. PayPal can generate one of these for you as well but it will be listed as buttons for email or something like that. ie the same kind of link you use to put paypal in an email can work in a web page. This is how the PayPal Donate button at the top of this site is configured, its just a link, not a form.
Hope it helps,