I followed all of the instructions in (http://forums.xbox.com/xbox_forums/xbox_support/f/12/t/26145.aspx), and am still unable to purchase Microsoft Points using my added Paypal account. However, I still get the following error (when trying to purchase through xbox.com):
Your payment instrument could not be authorized. Please contact your provider, or try a different payment option.
Physical Region: Ohio, USA
Verify all requirements are met: Done
For 40001 errors, verify you have waited 72 hours: No 40001 error
What you are trying to purchase: Microsoft Points