The LaserWriter Select 360 paper cassette allows you to use a variety of paper sizes by adjusting the cassette to meet the paper sizes used. In order to adjust the cassette, you must extend or retract a blue guide in the center of the tray to meet the top of the paper. When adjusted properly this guide clicks into place against a marking on the tray that specifically indicates what the paper size is. If this clip is damaged, the cassette indicates the wrong paper size to the printer.
When selecting autoselect from the print dialog, the Mac OS checks the printer to see what paper sizes are installed and compares them to what is selected in page setup, for example US Letter. If the printer indicates something other than US Letter paper in the cassette and there is no other source for 8.5 x 11 paper, the printer assumes you have put 8.5 x 11 in the multipurpose tray and pull from there. If there is no paper in the multipurpose tray an out of paper message appears.
When the clip is moved to adjust for paper size, a white spindle on the outer right back of the tray rotates to trigger a response from the printer. If the clip is seated properly in the cassette tray, the spindle appears as follows:
-----> three grooves pointing one direction
----->
----->
<----- followed by three groves pointing the other direction
<-----
<-----
followed by a blank area the size of three grooves
<----- followed by three groves pointing the same direction
<-----
<-----
If it appears in any other configuration, adjust the cassette one more time to be sure it is seated properly. If so, then the cassette will need to be repaired or replaced by your local Apple service provider.
Why The Printer Indicates the Wrong Paper Size
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Essentially the peg on the bottom of the blue clip has come unseated from the white hook which connects it to the rotating spindle. Because of this, the spindle gives an incorrect reading and the printer believes that there is some other paper type besides U.S. Letter in the tray. This clip can be reseated by disassembling the tray, but this should only be done by an Apple Authorized Service Provider to avoid damaging the tray in a manner that is not covered by warranty.