The quick answer is, yes, buds can form in sheaths that are droopy or that have dried up and turned brown. You should never cut sheaths off, even if you think they won't bloom. The longer answer is the sheaths don't mean much. If a sheath is going to form at all, it will form when the pseudobulb first grows out. But Buds will not form in every sheath. Some may bloom and some won't. On some cattleyas only the very last pseudobulb on the rhizome will bloom. Other cattleyas can bloom on every new growth. I've even had catts with many sheaths that just decide not to bloom that year for one reason or another. And to confuse things further, buds can grow from pseudobulbs that have no sheath at all. Good luck.
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