The LaserWriter 12/640 PS printer includes a universal cassette which lets you place a variety of paper sizes in the printer by adjusting the cassette for the paper size used. In order to adjust the cassette, the user must extend or retract the length guide on the left side of the tray to meet up with the top of the paper. When adjusted properly this guide will click into place by a marking on the tray that specifically indicates the paper size.
There is some confusion because the 8 1/2 x 11 length guide setting is not completely at the back of the cassette. In fact, when the length guide is at the back of the cassette, the cassette is actually set for A4 paper. This is probably why your test page is clipped and print jobs are being sent to the multipurpose tray instead of the cassette. Move the length guide, located on the rear left side of the cassette, one notch to meet the top of the 8 1/2 x 11 paper.
When choosing AutoSelect in the print dialog box, the Macintosh will check the printer to see what paper sizes are installed and compare it to what is selected in page setup. If the printer senses A4 size paper in the cassette, the printer will look for 8 1/2 x 11 paper in the multipurpose tray to print with. If there is nothing in the multipurpose tray, you will get an out of paper message.