The list of paper sizes you see there are put in place by Windows.
If you are using a custom label size that Windows doesn't have in place by default, you can create a custom form:
Open Control Panel, then Printers.
Click on File menu, Server Settings (or Server Properties).
Check the box "Create a new form"
Change the Form name field to a descriptive name including the width & height of the label (use a ruler), such as "3.5 x 1"
In the "Form description" section, adjust the Width and Height fields to match your label.
Click the Save Form button.
This label size will then be available for all Windows printers, including the Wasp printer.