There is a very simple way on Magento 1.7 to remove the paypal logo from the sidebar without touching php files

The PayPal section has been moved in Magento 1.7.

You can disable the logo by going here:

Login in to admin panel and go to the following paypal configuration section mentioned below,

System->configuration->payment methods -> Paypal All in one payments solutions->
Paypal Payments Advanced (includes express checkout)-> Basic settings paypal payments advanced->
Frontend Expereince settings -> Paypal Product Logo

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