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Steam has its own payment processor. 
Also, paypal is allowing to buy sex stuff, it just doesn't allow the sale ( unless they have changed that as I have seen above ). 
Nutaku pays directly to your bank account, not Paypal or anything else ( again, as far as I know, I set up my account with them years ago ). 

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Note: If one can use PayPal to purchase "sex stuff", others must logically be able to sell that same "sex stuff"; otherwise, where is the money going?

I have used PayPal to make purchases on websites that provide adult materials.

Nope, not really. 
PayPal has its own logic, most times. 
They allow you to buy, but, they don't allow you to sell. And that is most likely because of "frauds" involving adult content and because they don't want to bother with that. 

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Again - every PayPal transaction has both a buyer and a seller. So, if people can buy something with PayPal, someone else is selling that thing.

If no one was allowed to sell such things via PayPal, then there would be nothing for anyone to buy, so in effect buying such things would not be possible either.

If you mean PayPal might shut down a seller's account due to violation of terms or too many chargebacks and such, but would not shut down the accounts of the people making the purchases? I imagine that's correct.