The labels must be loaded and pushed against the left side of the printer and lid closed when printing to ensure the labels don’t “wander” out of the sensor’s view.
Assuming the label roll product is installed the correct way up and in the correct position, the printer itself may have an error message stuck in its print queue from the last job record it was told to print. i.e when the last print job failed because the previous roll ran out / finished this is still recorded.
To check this, open the Dymo Labelwriter “Printer” dialog box (double-click it on the tray or go to “start / control panel / printer and faxes” – then double-click on “DYMO LabelWriter ICON”. Once open, you’ll see a list of “failed” print requests. Somewhere in there you’ll find the one with the “laserwriter output” out of paper message. Select that and cancel or delete it.