Training
Of Eat3D - ZBrush 3.5 - A Comprehensive Introduction
He uses a version 3.5r2
And he manages to paint with ZProject
There are people that can explain
First 3.5R2 is no longer supported.
Second, some of the code for the ZProject brush has already been rewritten for new features coming with ZBrush 4. As a result, some of the functionality for the ZProject brush is not currently working. It will return with ZBrush 4.
For now, you could use ZAppLink to send the canvas to Photoshop and do your cloning there. This will be applied back onto the model when you return to ZBrush.