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Everything you checked sound good. Might be printer software problem, and needs to be re-flashed. Software only available from secure web site that a technician would have, see what it cost if to much buy a new one with extra bells and whistles !
Check if the correct paper type and size is set in the printer settings. Also check if the paper guides are set to the correct size in the paper tray. Sometimes, the paper sensors will not detect the correct paper if the guides are set to the incorrect size.
I have problems with paper jams all of the time and it won't print once it jams. I turned off the printer, unplugged it, plugged it back in and turned the printer back on and it worked. You could try that.
This printer is very finicky about paper loading. I see this error most commonly when using auto-cut roll paper. If the paper edge is not cut perfectly straight, and it is not inserted into the printer perfectly strait, it will give you an error. When it does this, you can simply load the paper and press "cut" instead of "pause" when it says "press pause" and it will cut the paper straight. You can also set it to "Roll Paper Manual Cut" and load the paper, then set it back to "Roll Paper Auto Cut."
Check to see if the cutter module has fallen off the print heaqd carriage. A common problem. It is a blue module that snaps into the left side of the carriage. Usually if it has fallen out, it can be found in the far left end of the printer, so you have to stop the printer, lift the lid and stick your hand into the left cave.
Merlin's idea, of what paper Lex has, and Lex's are different or you have loaded Lex's tray with the paper sideways
Your in Oz so it would be A4 standard and I guess your trying to print B5 script. Try these
The printer has been loaded with one size paper but thinks it is another. change printer settings via keypad on printer
The B5 scripts paper is being loaded sideways instead of length ways or visa verse
There is a incorrect setting in the printer driver that is set up for this specific printer that 'merlin' uses, check print driver setting (control panel,printers and fax, right click on lexmarkt642's icon, properties and check properties fully) in windows software that is running under merlin, also check merlin settings if any for this printer