As far as I know, there’s no way to embed actual file attachments inside sequence emails. HubSpot only allows that in one-off emails sent from a contact record, not in templates used for sequences.
Sequences always treat attachments as links, so the paperclip option is intentionally disabled. It’s mainly a deliverability safeguard.
What usually works best is uploading the file to HubSpot Files and linking it with a clean preview. If you really need to pass files automatically, doing it outside the email itself is sometimes easier, but it won’t embed anything inside the sequence email.