In this paragraph, the paper boat is a a. simile for stories jamie makes up about himself. b. metaphor for daydreams. c. simile for jamie's past. d. metaphor for jamie's past and future.

In my opinion, the correct answer is A. simile for stories Jamie makes up about himself. Simile is a figure of speech that compares one thing or phenomenon to another, with or without the conjunction "like" or "as". In this case, the comparison to a paper boat obviously refers to "stories about the real Jamie Sabin" that he sets adrift.

By the way, here is the excerpt:
Inside the bus, in his summer Class-A uniform with its brass glitter and infantry-blue shoulder cordon, Jamie Sabin was going home. Fort Benning would be a fading dream; Preston, Virginia, a place unknown, his future. He was in between, fumbling with puzzle pieces, making up stories about the real Jamie Sabin. Each of these he set adrift like a paper boat on a shifting sea of daydreams. He did that encased in the drone and shudder of diesel pistons and hissing tires. Jamie Sabin was going home to a place unknown. 

Cis the correct answer