What to select for "type of source" for a paper in Microsoft Word?
The paper you link is not a journal article. It's published as part of a conference proceedings.

You can find the complete proceedings in which that paper appears here (link is to the SPIE page for the 1994 conference Telemanipulators and Telepresence Technologies).

To address some other points in your question, I cannot think of a legitimate research paper that was not published in a journal or conference. Publishing in this sense means putting the paper through peer review, an essential part of contributing to the literature if you want your work to be taken seriously. 

Furthermore, conference proceedings are exactly what it says on the tin: proceedings (i.e. talks) from a conference that have been written up and published. Publishing in this way is more common in some fields than others, for example, in computer science, just like the paper you linked.