There are several ways to maintain your inventory.
The easiest is to use PayPal's item button creator from within your PayPal Account. (This means that the current code you have won't work as it's not "hosted" type code.) When using this method to generate the code you need, use Step 2 of the process to setup your inventory. Once you have generated the code, you then copy and paste the code to your web site or page.
Note, PayPal's inventory feature is basic where as it does not display an item count on your web page. If the item is sold out, the customer is notified on the PayPal Checkout Screens when they proceed thru the process. We sell one of a kind items and use this method. It works well for our needs. All we do is go back to our web site, mark the item sold and rem out the item button code. This still permits people to still see the type of items we have, they just can't order one.
Your next option would be to use a 3rd party shopping cart. Many carts use a backend database to manage your inventory and can also display an item count right on your web page. If the item is sold out at that point, the customer cannot add the item to their basket or cart unlike using PayPal's item button code.
See this link for a listing of 3rd party carts via PayPal:
https://www.paypal-marketing.com/paypal/html/hosted/emarketing/partner/directory/
Note, with most 3rd party carts, there are additional costs either for using their services or puchasing the software. There are also open source type carts, the software is free however, you have to do a bit of work on your end.
Here's one example of a free open source cart:
http://www.joomla.org/
Other options, here's a 3rd party service that works well with PayPal and has features that may be of interest:
http://www.e-junkie.com/
As for shopping cart software, here's one to check out:
http://www.coffeecup.com/shopping-cart-pro/
