In older versions of Labeler, if you were using a label size that was not set up in the printer driver, you could use the User Setting and it would show the layout properly. In V7, you must add the label size to the printer driver.
In Windows Vista/7, go to Start > Devices and Printers. In Windows XP, it's Start > Printers and Faxes. Right-click the printer and select Printing Preferences. Click New and enter a name and the correct size for the label.
When you next open Labeler, the new label size will be available under Print > Preferences.