The previous PayPal donation checkout form https://www.paypal.com/cgi-bin/webscr appears to have stopped working after years suddenly yesterday and says, "Things don't appear to be working at the moment. Please try again later." When generating a donation form through their tool it now has an updated interface so assume they changed something quietly.
When using the new process I'm able to affectively get the same results (albeit different UI now except that the make monthly button is no longer checked automatically. The user has already selected monthly donation in a previous ui that that redirects them to this page so need the monthly donation checked by default. Can't seem how to to do that. When generating the button it says custom variables supported, and lists one called, _xclick-subscriptions that was used before but anytime that is entered it says not supported.

It sounds like you were previously using a "Subscribe" button, not a "Donate" button. These are separate types of buttons within PayPal.
You can go to https://www.paypal.com/buttons and see if you are allowed to create a "Subscribe" button there. If you do create such a button, the .png file of the image in the generated code can be changed later to point to any image you want on your website -- or PayPal's default "Donate" image, if you prefer.
If you are not allowed to create a "Subscribe" button, then you will just have to use the "Donate" type button. Its recurring checkbox cannot be enabled by default.
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