I just lost a bid on eBay item number:360838074182 with the starting price of $24.99 and my Snipe price up to $30.99. After reading the forums I see one of the potential problems can be "Your PayPal account is not linked to your eBay account" which did show up on myibidder notice. When I go to the items page I don't see anywhere that the seller requires me to have PayPal linked to my eBay account. It just says payments accepted by PayPal. I won another item two days ago using snipe and they accept pay pal too.

Some sellers block bidders who do not have PayPal account linked to their eBay account. You can not see it from the listing if the seller has a block or not.
If you still don't want to link PayPal account, then you should place a minimum manual bid first. If your manual bid will not work, your snipe will not work too.