I remember reading about this in Awake ( there are some interesting articles in it).
From memory, you are actually dreaming, even though you are awake. The subconscious projects the dream into the conscious mind, and it seems that the dream is really happening.
The paralysis is the brains natural reaction that prevents you from harming yourself, due to reacting to your dreams.
I still have dreams about demons, and I wake up saying Jehovah, Jehovah under my breath. The effects of brainwashing.
Are you having treatment for your condition?
If you havent read the Awake article, I'm sure you could find it on their cd library thingy. Somewhere around the 1980's.