Proxying PaperMC's repository (https://repo.papermc.io/repository/maven-public/) fails because the SNAPSHOT directory name (1.20.4-R0.1-SNAPSHOT) doesn't match the in maven-metadata.xml (1.20.4-SNAPSHOT). The validator at MavenMetadataContentValidator.validatePath() does a strict path.equals() check and throws InvalidContentException.
Here's the log:
WARN MavenMetadataContentValidator - maven-metadata.xml path
io/papermc/paper/paper-api/1.20.4-R0.1-SNAPSHOT/maven-metadata.xml
does not match the expected path
io/papermc/paper/paper-api/1.20.4-SNAPSHOT/maven-metadata.xml
I suggest that when Layout Policy is Permissive, skip this validation.