Can you legally make an item using scrapbook paper and sell it?

Unless the paper includes a licensed image (Disney, MLB, etc), you should be fine, because you're paying them for the paper. What you would not be able to do without a license would be to scan and reprint the paper's images: taking a single 35-cent sheet of designed paper and making an infinite number of copies of it.

For example, using scrapbook paper to create a single greeting card and selling it, should be okay.
Using scrapbook paper to create a digital scrapbook page, or in a mass-produced greeting card, would require a license.