It is locaded a few miles from Castle Wolfenstein. The town has a long history with occultisum and the headquarders of the SS Paranormal Division is relocated here during the final stage of Operation Resurrection. The town feaures a large chateau and draws its power from a nearby hydroelectric plant.
There is a real life city of Paderborn, but located in western Germany and not in the Alps.
Artwork from the RTCW strategy guide shows that Castle Wolfenstein looms on a mountain above both villages of Paderborn and Wulfburg.