Real Madrid was the favorite from the beginning of the Champions League competition, and for them to reach this stage and keep performing as expected, they are still the favorites and can surely win the title.
I think they were just among the favorite and not the only team in that category. Personally, I was looking at Man City, the defending champion, to also lift the trophy this season even though I did not rule out the possibility of Real Madrid. It was when the quarter final draw came out and Man City was drawn against Real Madrid I became confused because it was difficult knowing which of them will advance to the semi final.
Dortmund is not in good form, they ended the season below the top four spot which means if they didn't win the Champions League, they will be playing in the Europa League next season, that is why they will try heir possible best to win Real Madrid, which is possible but almost impossible because because Madrid is a better team and in good form than Dortmund, unless if Dortmund is very lucky just as they have been lucky all these time.
Seems you have soon forgotten how they beat PSG both home and away. They might not be in their best form but that is only with respect to their Bundesliga matches because they were very powerful in the champions league. They did not did not qualify for the champions league final by mistake and I will not want us to think that Real Madrid will win them without stress.