You can get paper out messages if your media sensors are not calibrated. Go into the LCD menu and perform a "Media and Ribbon Calibrat". The LCD will tell you what to do step by step: Load backing, remove ribbon, load ribbon. If you are not using a ribon, just hit next. One reason that these sensor values can get out of whack is that your printer may be set to calibrate on head close or power up. Consider changing these values in the LCD to Power up = "no motion" and Head Close = "feed"
I would also suggest upgrading to the latest version of firmware from Zebra.com .
Check and clean the sensors, also the reflective surface. Make sure there are no lables stuck to the reflective surface. Use Isopropyl Alcohol to clean.
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