Some SchoolBase users have had problems generating merge labels since upgrading to Office 2010, particularly either no labels being generated, or an error message. 

Microsoft have released a hotfix for Word 2010 which some schools have found to solve this problem. It is at http://support.microsoft.com/kb/2553912. Please try this hotfix in the first instance, but if it does not help you, the workaround below should help.

The following settings alleviate this problem.

1. To solve for one machine:

Create a new folder on the C: drive, to store Office Templates.

Delete Normal.dotm from the roaming profile cache (C:\Users\\AppData\Microsoft\Templates)

In Word, in a blank document, go to File, Word Options, Advanced, File locations, and add your C: drive Templates folder as a File location for user templates.

2. To solve in Group Policies, for all users:

You will need to import Office 2010 ADMX files to get group policies for Office 2010. In Office 2010 Policies, go to Administrative templates, shared paths, and enable the 'User templates path' setting.