This can also be caused when the upper cassette tray (for small paper stock / photo paper) becomes detached from the lower tray. There is a gear attached to the lower paper tray which handles movement of the upper paper tray. Make sure that moving this gear causes the upper paper tray to move. If it doesn't, then you need to snap the upper paper try on a little better.
SOURCE: paper cassette is not seated
I had this same problem and tried everything (I thought) to fix it. Then I saw the solution at:
http://www.retrevo.com/c/sohohelp/blogs/show/6633/I-just-had-my-espon-artisan-800-replaced-and-the-refurb-keeps-saying-that-the-paper-cassette-is-not-seated-correctly#replyForm
Basically there is a plastic pin that tends to break off and stays in the area where the cassette is loaded. It takes up just enough space to keep the cassette from being pushed in all the way. The solution is to turn the printer off, unplug it, then lift up the printer so the broken pin falls out. Once it comes out, the printer will work fine again.
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