Are the labels Avery? Why not download the Avery template and try it. Not a lot of work. I fixed the same problem on my wife's computer by going into the label setup and changing the spacing. A new printer may not solve your problem. The printer is just printing what the computer tells it to print.

I would try recycling (starting and stopping) the print spooler and RPC services if I were you. Open Control Panel and then open Administrative Tools and then Services. The services are in alpha order so find Print Spooler, right click on it and select Stop,,,wait until it's stopped, then right click and select Start. Repeat the step with Remote Procedure Call (RPC). Try again to install the printer, by unplugging the USB from the computer side, restarting Windows and then plugging it back in. If the steps to clear the print spooler don't work, there are some more detailed instructions for doing this through the run line that I can provide if needed.

some links for reference Sharing your printer wirelessly Share Files and Printers between Windows 7 and XP this is what got mine working properly, I found the info on the windows 7 forums (Jimbo45) after I did this it worked great. Just be sure to put the name of your actual machines and names in there rather than what he is using as an example. "to share Printers attached to XP computers with either X-64 or X-32 versions of Windows 7 is SIMPLE. These instructions are for the Printer attached to the XP machine (but works in reverse as well). ("Stand alone" Network printers can be done slightly similarly BTW). assume the computers are call XPMACHINE and W7MACHINE. 1) Ensure Printer on XP machine is shared - assume it's called SHAREDPRINTER. 2) On the Network Browsing on your Windows 7 machine ensure you can "See" the Printer share. Now on the Windows 7 machine do the following (doesn't matter if it's X-86 or x-64). 3) Control Panel==> add LOCAL (Yes LOCAL) printer. I know it's on a Network but hold your horses -- what we are actually doing is "Poodlefaking" the Windows 7 machine into thinking it's running the printer. 4) Create NEW port==>Local port 5) Portname is \\XPMACHINE\SHAREDPRINTER 6) Now Windows 7 will load a driver and you'll be able to print on the XP machine. Simple (For a "Network stand alone printer") at 4) chose TCPIP port and at 5) enter the IP address. If the printer is on the Windows 7 machine and you want to print on the XP machine then do the same instructions on the XP machine -- port name in this case will be \\W7MACHINE\SHAREDPRINTER Here is a link that might be useful: windows 7 forum

Mine is in another room, in my Hoosier cabinet. I have a wireless network, and the printer is hooked up to another computer that is on all the time. I rarely actually print, most stuff is printed to Acrobat as a pdf file and saved on my computer. I share the printer and a lot of the folders on both computers so I can go back and forth between them and open, print and manipulate files on either computer. Here is a link that might be useful: Computer in kitchen