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Writing in fuller paragraphs feels like it creates better reading flow, as opposed to short choppy chunks of text, but that's a *prose* consideration.  For *instructions*, the primary goal is to help the reader do all the necessary steps in applicable order.  If lots of steps are combined in a single paragraph, there is greater risk of the reader missing a part.

In many style guides, procedures are even spelled out as numbered lists.  The reader can then track progress through the list more easily.  This can be overkill if there are only a couple steps but important if there are many, so use your judgement.

Whether you present it as paragraphs or list items, keep it to one logical chunk of work per chunk of text.  A chunk of work might combine several elements -- "fill out your shipping and credit-card information in the form", for example, as opposed to spelling out the individual steps.  Think about the logical chunks from the user's point of view, including how the UI guides the user.

For non-technical examples, consider recipes.  You've probably seen a bunch.  Which style is easier to follow when you're actually cooking, as opposed to when you're browsing cookbooks trying to decide what sounds good for dinner?