The MS-DOS COM drivers scan for a particular signal on the RS-232 port for
the paper-out condition. Given that, you're probably experiencing some
type of cable problem. Most likely, you're missing a jumper on the PS/2
side. Check the DSR or CTS pins.
Also, the LaserWriter IINTX revised manual has about 25 pages of comprehensive
details on connecting LaserWriters to IBM-compatibles. Check that for further
troubleshooting.