Hi Dave,
Just a daft one, but have you checked that there is definitely nothing jamming the printer ie small bit of paper etc. Otherwise...
It appears that is a problematic printer. It could be down to 2 things. Firstly try following this
http://www.resetters.com/download/r200-ap.zip?osCsid=ab829996c33c98f4adbe0d9d147c6e1 link to which it will download a zip file with an EXE file to run. Unfortunately I can't test this as I don't have the same problem, or the printer
This is supposed to be a program that resets some of the software on the printer to make it show error signs when it is not supposed to.
If this does not work, then there is another fix that might work. There is a conflict with XP SP2 with this printer. If you have XP SP2 then this i meant to be the fix for it:
FOLLOWING http://HTTP://TINYURL.COM/6QG39
Solution
Download the DOS Application Patch for Windows XP Service Pack 2 (part number 6945970000). After downloading the file, double-click it and follow the on-screen instructions to install the patch, which will restore the missing file needed for running DOS-based programs and processes in Windows XP.
TURN OF COMPUTER RESTART THEN RE INSERT PRINTER DISC AND RE INSTALL
I under stand that these solutions are both a bit risky with being EXE files from the internet, so if you have any anti-virus software I would check it. But I found to mention of problems. If these do not fix the problem, then try a bit of Google. It is littered with this kind of thing.
Top tip: I recommend a Canon printer next time. I've never had a problem with them - even the budget ones. I can't say the same about Epson though.
Luke