Can the software create paper bid sheets?

Yes, from Workspace > Auctions > Auctions, in the Auctions grid (Auction Purchase List) you can print individual bid sheets by clicking on the printer icon on the item's row or use the actions menu to print all the bid sheets.

You can also choose the format for the bid sheet, include your pre-assigned bid increments, and if you export it to Word, you can edit the bid sheets as desired.