Kurt, that was my only suggestion. Xerox doesn't officially support Avery software, maybe you can see if Avery knows something about the issue??? Have you tried to use a different driver? For example, if you are currently using a PostScript driver you could download and install a PCL driver (or vice versa) to see if that makes a difference.
I downloaded an Avery template directly from Avery's website. It works fine with other printers but when we try to print to the xerox 3635MFP, it doesn't line up. Everything is shifted down slightly just enough so that it prints off the label. We have to manually adjust every template to make it print correctly. We have the same issue with other templates. They work fine on other printers but not on this printer. Any ideas?