From my understanding you select paper but interfolio sends them electronically. This is due to the fact that interfolio needs the matching forms which are not generated when you select electronic since the instructions are sent to the letter writer directly. I believe you will still have to input the letter writers into AADSAS, then upload the matching forms to interfolio. Interfolio will then electronically deliver the letters to AADSAS. You can view the status of the letters via the “Evaluations” link on the right hand side. I would recommend not providing an email even though the letter is to be mailed physically. I am not sure if aadsas will attempt to send a matching form via email to the writer.
More information: http://help.interfolio.com/entries/24065501-ADEA-AADSAS-Applicant-FAQ