Hello Sheila,
I searched the Knowledge-base for this issue and found THIS SOLUTION on paper trays being greyed out.
If this doesn't help, you may need to contact the Support Department at 1-800-821-2797.
I have a new Versalink C500DN. I just installed it and it mostly is working fine. I have an extrra paper tray. The printer sees both paper trays and has the correct size listed. One is letter (8.5 X 11) and one is statement (5.5 X8.5) When I try and print a statement size document (both from publisher and acrobat) the print window will only let me choose auto select or bypass, the two trays are grayed out. If I am printing letter size I don't have the problem. And autosize doesn't work...it tells me to use the bypass tray instead of choosing the tray with the statement sized paper. Help! All my printing is statement size :)